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NEW system-

paper CURRENCY.

BY LTSAUDEE, SPOONER.

BOSTON:

FEINTED BY STACY & RICHAKDSON,

Ko. 11 Milk Street.

18 6 1.

Entered according to Act of Congress, in the year 1861,

Bt LYSANDER SPOONER,

in the Clerk’s office of the District Court of the United States, for the District
of Massachusetts.

CONTENTS.

PART FIRST.

Note,

Chapter I. — Outline of the System,

Chap.

II. — Advantages of the System, .

Chap.

III. — Security of the System,

Chap.

IV. — Practicability of the System,

Chap.

V. — Legality of the System,

PART SECOND.

Akticlbs of Association of a Mortgage Stock

Banking Company.

Digitized by the Internet Archive
in 2016

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NOTE

The subscriber believes that the right of property in ideas, is as valid, in the
view both of the Common and constitutional law of this country, as is the right
of property in material things ; and that patent and copyright laws, instead of
superseding, annulling, or being a substitute for, that right, are simply aids to it.

In publishing this system of Paper Currency, he gives notice that he is the
inventor of it, and that he reserves to himself all the exclusive property in it,
which, in law, equity, or natural right, he can have ; and, especially, that he
reserves to himself the exclusive right to furnish the Articles of Association to
any Banking Companies that may adopt the system.

To secure to himself, so far as he may, this right, he has drawn up and copy-
righted, not only such general Articles of Association as will be needed, but also
such other papers as it will be necessary to use separately from the Articles.

Even should it be possible for other persons to draw up Articles of Associa-
tion, that would evade the subscriber’s copyright, banking companies, that may
adopt the system, will probably find it for their interest to adopt also the subscri-
ber’s Articles of Association ; for the reason that it will be important that Com-
panies should all have Articles precisely, legally, and verbally alike. If their
Articles should all be alike, any legal questions that may arise, when settled for
one Company, would be settled for all.

Besides, if each Company were to have Articles different from those of others,
no two Companies could take each other’s bills on precisely equal terms ;
because their legal rights, as bill holders, under each other’s Articles, would not be
precisely alike, and might be very materially different.

Furthermore, if each Company were to have Articles of Association peculiar
to itself, one Company, if it could take another’s bills at all, could not safely take
them until the former had thoroughly examined, and satisfactorily ascertained,
the legal meaning of the latter’s Articles of Association. This labor among
banks, if Companies should be numerous, would be intolerable and impossible.
The necessity of studying, understanding, and carrying in the mind, each other’s
different Articles of Association, would introduce universal confusion, and make
it impracticable for any considerable number of Companies to accept each other’s
bills, or to cooperate in furnishing a currency for the public. Each Company
would be able to get only such a circulation as it could get, without having its
bills received by other banks. But if all banks have precisely similar Articles of

NOTE.

Association, then one Company, so soon as it understands its own Articles,
understands those of all other Companies, and can exchange bills with them
readily, safely, and on precisely equal terms.

Moreover, if each separate Company were to have its peculiar Articles of
Association, it would be wholly impossible for the public to become acquainted
with them all, or even with any considerable number of them. It would, there-
fore, be impossible for the public to become acquainted with their legal rights, as
bill holders, under all the different Articles. Of course they could not safely
accept the currency furnished by the various Companies. But if all the Com-
panies should have Articles precisely alike, the public would soon understand
them, and could then a,ct intelligently, as to their legal rights, in accepting or
rejecting the currency.

The subscriber conceives that the Articles of Association, which he has drawn
up, and copyrighted, arc so nearly perfect, that they will never need any, unless
very trivial, alterations. In them he has intended to provide so fully for all
exigencies and details, as to supersede the necessity of By-Laws. This object
was important, not only for the convenience of the Companies themselves, but
because any power, in the holders of Productive Stock, to enact By-Laws, might
be used to embarrass the legal rights of the bill holders under the Articles of
Association.

Besides, as the holders of Productive Stock are liable to be continually
changing, any power, in one set of holders, to establish By-Laws, would be likely
to be used to the embarrassment, or even injury, of their successors.

It is obviously important to all parties, that the powers of the Trustees, and
the rights of all holders, both of Productive and Circulating Stock, should be
legally and precisely fixed by the Articles of Association, so as to be incapable
of modification, or interference, by any body of men less than the whole number
interested.

LrSANDEE SPOONEE.

Boston, 1861.

PIET FIEST.

NEW SYSTEM

O F

PAPER CURRENCY.

CHAPTER I.

OUTLINE OF THE SYSTEM.

The principle of the system is, that the currency shall repre-
sent an invested dollar, instead of a specie dollar.

The currency will, therefore, be redeemable by an invested
dollar, unless the bankers choose to redeem it with specie.

Theoretically the capital may he made up of any pi'operty
whatever. But, in practice, it will doubtless he necessary, in
order to secure public confidence in the currency, that the capital
should be property of a fixed and permanent nature, liable to few
casualties and hazards, and yielding a constant, regular, and
certain income, sufiicient to make the Productive Stock, here-
after mentioned, worth ordinarily par of specie in the market.

The best capital of all will probably be mortgages ; and they
may perhaps be the only capital, which it will ever be expedient
to use.

This capital is to be put into joint stock, held by Trustees, and
divided into shares, of one hundred dollars each, or any other
sum that may be thought best.

A NEW SYSTEM OF PAPER CURRENCY.

This Stock may be called the Productive Stock, and will
be entitled to the dividends.

The dividends will consist of the interest on the mortgages,
and the profits of the banking.

Another kind of Stock, which may be called Circulating
Stock, will be created, precisely equal in amount to the Pro-
ductive Stock, and divided into shares of one dollar each.

This Circulating Stock will be represented by certificates,
scrip, or bills, of various denominations, like our present bank
bills — that is to say, representing one, two, three, jive, ten, or
more shares, of one dollar each.

These certificates, scrip, or bills of the Circulating Stock will
be issued for circulation as a currency, by discounting notes, &c.,
as our bank bills are now.

This Circidating Stock will be entitled to no dividends : and
its value will consist wholly * in its title to be received, at its
nominal value, in payment of debts due to the bank, and to be
redeemed by Productive Stock, unless the bankers choose to
redeem it with specie. In law, the Circulating Stock will be in
the nature of a lien upon the Productive Stock.

Such are the general principles of the system.

The following provisions, although perhaps not essential to the
system, will yet serve to keep the currency at a uniform value,
and make the system operate without friction.

The original owners of the Productive Stock, and all who
hold it through purchase from them, (instead of by transfer in
redemption of bills,) may be called Primary Stockholders.

* With a single exception, (provided for in Artiele XXVII, of the Articles of
Association,) not affecting the general rule.

OUTLINE OP THE SYSTEM.

Those, who hold Productive Stock, by transfer in redemption
of bills, may be called Secondary Stockholders.

All the resources of the bank — that is, the interest on the
mortgages, and the banking profits — should be pledged to pay
the Secondary Stockholders precisely six per centum per annum
(or such other per centum as the Articles of Association may fix
for them to receive) on their Stock ; no more, no less. After
these dividends shall have been paid to the Secondary Stock-
holders, the remaining dividends should be divided among the
Primary Stockholders — whether such dividends shall be
more, or less, than those received by the Secondary Stock-
holders.

The effect of securing to the Secondary Stockholders pre-
cisely six per centum (or any other given per centum) on their
Stock, will be to make the bills represent, to the public, either
invested capital, yielding precisely six per centum per annum (or
precisely any other per centum, which it may be designed to
represent) or specie ; because the bills may, at pleasure, be con-
verted into such capital, unless the bankers prefer to redeem
them with specie.

Whenever Productive Stock shall have been transferred, in
redemption of bills, the bankers will have the right to buy it
back, at pleasure, on paying its face in specie, with interest, (or
dividends,) at the prescribed rate, for the time it shall have been
in the hands of the Secondary Stockholders.*

It may be desirable, for various reasons, that the currency,
representing the invested dollar, should, at all times, be, as
nearly as may be, on a par with the specie dollar ; neither rising
above, nor falling below it, in value. This object, nearly enough
for all practical purposes, can be accomplished in this way, to wit :

The rate of dividend, secured to be paid to the Secondary
Stockholders, on their Productive Stock, should be fixed so
high as to make that Stock worth, in their hands, par of specie.

* See Article XIX, of the Articles of Association.

A NEW SYSTEM OF PAPER CURRENCY.

(Under an abundant currency, such as this system would furnish,
six per centum would probably be sufficient for this purpose).
This would keep the hills uj) to par with specie ; because they
could, at pleasure, be converted into either Productive Stock,
or specie.

On the other hand, the facts, that the bankers may, if they
please, redeem their hills with specie, rather than hy Produc-
tive Stock, and that they will have the right, at any time, to
buy back the Productive Stock, from the Secondary Stock-
holders, by paying its face in specie, will generally keep the
bills down to par with specie.*

So long as the banking business shall yield sufficient profit to
pay expenses, and the Productive Stock shall remain in the
hands of the original owners, there will be no necessity for the
interest on the mortgages being paid; because what would be
paid in by each Stockholder as interest, would come directly back
to him as dividend. The payment of the interest to the hank,
and of the dividends (so far as they shall be made up of such
interest) by the bank, will therefore be merely nominal transac-
tions on the books of the bank, without either being actually
made.

If an original Stockholder should sell his Productive Stock
outright, it would then be necessary that he should pay his
interest.

* Even if the rate of dividend, fixed for the Secondary Stockholders to receive,
were such as to make their Stock worth more than par of specie, that would not
be likely to make the bills worth more than par of specie ; because a person, by
returning his bills for redemption, would not be sure of getting Productive
Stock for them. He might be paid in specie, instead of Productive Stock.

Purthermore, even if his bills should be redeemed by Productive Stock,
instead of specie, he would not be likely to hold it a very long time, before it
would be bought back by the bank, by simply paying its face in specie.

There would, therefore, be likely to be no scramble for bills (in order to get
Productive Stock for them) even though the rate of dividend, fixed for the
Secondary Stockholders to receive, should be such as to make the Productive
Stock worth, in their hands (supposing they conld retain it a length of time)
more than par of specie.

OUTLINE OF THE SYSTEM.

If, when any Productive Stock shall have been transferred,
in redemption of the bills, the banking profits should not be
sufficient to pay the dividends, to which such transferred Stock
will always be entitled, it will be necessary for the original
Stockholders to pay interest pro rata on their mortgages, suffi-
cient, with the banking profits, to pay the dividends on such
transferred Stock.

If any original Stockholder (mortgagor) should wish, at any
time, to take his capital out of the bank — that is, release his
estate from the mortgage — he has only to request the Trustees
to cancel an equivalent amount of his own Productive Stock,
and also an equivalent amount of Circidating Stock. They can
then discharge his mortgage, without injustice to any one ; and
his rights in, and liabilities to, the bank are at an end ; he
having first paid all dues that may have previously accrued.

Minor details of the system will be seen in the Articles of
Association.

Although the banks make no absolute promise to pay specie
on demand, the system nevertheless affords a much better prac-
tical guaranty for specie payments, than our present system ; for
these reasons, viz. ;

1. The banks would be so universally solvent, and so univer-
sally known to be solvent, that no runs would ever be made upon
them for specie, through fear of their insolvency. They could,
therefore, maintain specie payments with much less amounts of
specie, than our present banks can.

2. In ninety-nine times in a hundred, the alternative redemp-
tion would probably be preferred to specie, by the bill-holders.
This would still further lessen the amount of specie necessary to
be kept on hand.

3. The banks would probably find it for their interest, as pro-
moting the circulation of their bills, to pay, at all times, such
small amounts of specie, as the public convenience might require.

4. Whenever specie should not be paid on demand, no divi-
dends could be paid to the bankers, until all claims for specie,
with interest, should have been paid in full ; that is to say, until
all Circidating Stock, presented for redemption, and not redeemed
by Productive Stock, should have been redeemed by specie ;
and all Productive Stock, that should have been transferred in
redemption of circulation, should have been repurchased, by
specie, and restored to the original holders. (For particulars on
this point, see Articles of Association, especially Articles 13, 20,
23, 24, 25, 26, 27, 28, and 29.)

5. If there should be any suspensions of specie payments, they
would be only temporary ones, by here and there a bank sepa-
rately, and not by all the banks simultaneously, as now. No
general public inconvenience would therefore be felt from that

! cause.

N. B. In the Articles of Associatioti, the system appears
much, more clear, simple, and exact, than it can he made to
do in any brief description of it.

A NEW SYSTEM OF PAPER CURRENCY.

CHAPTER II.

ADVANTAGES OF THE SYSTEM.

1. The system would furnish, at all times, an abundant cur-
rency. It would furnish currency equal to one third, or one
half, the value of all the real estate in the country — if so much
could be used.

2. The currency would be stable in value. The system is
capable of furnishing so much currency, that a large demand
could be supplied as easily as a small one, and without causing
any variation in the market value of the currency, or raising the
rate of interest.

The presence or absence of specie in the country, would have
no effect, either upon the amount of currency, or upon the
stability of its value.

The prices of property would be stable, so far as their stability
should depend upon the stability of the currency.

3. The currency would be solvent. It would be absolutely
incapable of insolvency ; for there could never be a dollar of the
currency in circulation, without an invested dollar (Productive
Stock) in bank, which must be transferred in redemption of it,
unless redemption he made in specie. All losses, therefore, fall
upon the bankers, and not upon the bill holders. If the original
Stockholders should all fail — that is to say, if they should be
compelled to transfer all their Productive Stock in redemption of
their circulation — the result would simply be, that the original
capital (Productive Stock) would pass, undiminished, into the
hands of a new set of holders, ^cho icould -proceed to bank upon
it (re-issue the bills, and redeem them, if necessary., by the
transfer of Productive Stock) m the same way that their pre-

ADVANTAGES OF THE SYSTEM.

decessors had done. And if they, too, should lose all their
Productive Stock (capital) by the transfer of it in redemption of
the circulation, the Stock itself ■would pass, unincumbered and
unimpaired.^ into the hands of still another new set of holders,
who would bank upon it, as the others had done before them.
And this process would go on indefinitely, as often as one set of
bankers should fail (lose all their Productive Stock). The
holders of the Productive Stock, for the time being, would always
be the bankers, for the time being. And whenever one set of
bankers should have made such losses as to compel a transfer of
all their Productive Stock, that Stock would pass into the hands
of a new set of holders, and the bank, as a corporation., would
be just as solvent as at first. So that, however badly the banking
business should be conducted, and however frequently the hankers
might fail, (if transferring all their capital, or Productive Stock,
in redemption of their circulation, may be called failing,) the
bank itself, as a corporation, . cot<Zc? not fail. That is to say, its
circulation could never fail of redemption. Its capital would
forever remain intact ; forever equivalent to the circulation ; and
forever subject to a compulsory demand in redemption of the
circulation. In this way all losses necessarily fall upon the
bankers (in the loss of their Productive Stock) and not upon
the bill holders. (See Article XXI, of the Articles of Asso-
ciation.)

4. The solvency of the currency will be known by all, both
in the neighborhood of the place of issue, and at a distance
from it (if the bankers should choose to make its solvency
known at a distance). These results will be accomplished in this
way.

The mortgages, composing the capital of the bank, will be
matter of public record, and every body, in the neighborhood.,
will have the means of judging for himself of the sufficiency of
the property holden. If the property should be insufficient, the
bank would be discredited at once ; for the abundance of solvent
currency would be so great, that no one would have any induce-

A NEW SYSTEM OF PAPER CURRENCY.

ment to take that which was insolvent or doubtful. In this way
the credit of a bank would be established at home.

Its credit abroad would be established in this way, —

Suppose a bank, at Chicago, should wish to establish the credit
of its bills in New York. All that would need to be done would
be to make arrangements with some bank in New York to redeem
them.* And to induce the New York hank to redeem them, it
would not be necessary, as now, that the Chicago bank should
keep a deposit of specie in New York. All that would be neces-
sary would he to satisfy the New York bank of its (the Chicago
bank’s) solvency — • that is, of the sufficiency of the property
holden. This could be done by the New York bank’s sending a
commission to Chicago to investigate the question. And when
the New York bank should have once become convinced of the
^solvency of the Chicago bank, the credit of the latter is estab-
lished forever. The New York hank would not need to be
continually investigating the condition of the Chicago hank ;
because, under this system, a bank, once solvent, is forever
solvent.

It would, therefore, he perfectly easy for hanks, in remote
parts of the country, to make their bills redeemable in the great
commercial centres, or any where else they might please, without
keeping deposits of specie at those points.

One important result, among others, of this system would he,
that when a merchant, from Chicago, for example, should come
to New York to make purchases, he would not buy on his own
credit ; but would get his credit, at hank, in Chicago ; bring
Chicago bank bills to New York, and make his purchases with
them. Or else the bills of New York banks would be so abun-
dant at Chicago, that he would there exchange his Chicago bills
for New York bills, and bring the latter home, and exchange

* The New Y'ork bank would not redeem them by paying specie for them,
but by receiving them in payment of debts, and by giving its own bills in
exchange.

ADVANTAGES OF THE SYSTEM.

them for goods. Thus all the jobbing business of the country
would be done for cash, instead of on credit, as now.

5. The currency would be cheap (afforded at a low rate of
interest) and for two reasons. 1 . Because the capital costs noth-
ing. That is, its use as banking capital costs nothing ; because
its use as banking capital, does not interfere with its use for
other purposes. 2. The system admits of competition limited
only by the real property of the country. These two facts
would bring the rate of interest, at all times, down to the
lowest point, at which the simple business of banking could be
profitably done.

6. The basis of the currency could not, like specie, be carried
out of the country, so as to leave our own people destitute of a
currency.

7. The system stands wholly on common law principles ;
requiring no aid from the government, in the way of charters
of incorporation; and (in the United States) constitutionally
admits of no prohibition from the government.*

8. It gives the Stockholders all the benefits of an act of incor-
poration, so far as to shield them from individual liability. At
the same time, it avoids all necessity for privileged legislation.
It also avoids all injustice to, and all liability of throwing any
losses upon, the bill holders, because they are certain to get the

* The author does not concede the constitutional power of the State govern-
ments to prohibit any kind of banking, that is naturally and lawful. And he
fully believes all existing restraints upon private banking to be unconstitutional.
But, be they so, or not, it seems plain enough that government has constitution-
ally no more power to forbid men’s selling an invested dollar, than it has to forbid
the selling of a specie dollar. It has constitutionally no more power to forbid the
sale of a single dollar, invested in a farm, than it has to forbid the sale of the
whole farm.

The currency here proposed is not in the nature of a credit currency, (as the
word credit is now legally understood,) and could not be prohibited on that
ground, even if any credit currency can constitutionally be prohibited.

The currency proposed consists simply of hona fide certificates of Stock,
which the owners have the same right to sell, that they have to sell any other
Stocks.

A NEW SYSTEM OP PAPER CURRENCY.

precise thing they bargained for ; that being set apart, and made
legally incapable of being applied to any other purpose.

9. The system would be a free one. That is, the right of
furnishing currency, instead of being made a legalized monopoly,
would be open equally to every man, who had the necessary
property.

10. The system would be adapted to distribute credit equally
as possible through the community.

11. Currency and bank credits would be so abundant, cheap,
and generally diffused, as nearly or quite to supersede all other
forms of temporary credit between man and man, and introduce
a general system of cash payments. This would be the result,
for this reason. The banks could generally, if not always, afford
credit cheaper than individuals engaged in trade. The banks
would be so numerous, that a man deserving of credit at all,
could generally obtain it at bank. And the result would soon
come about, that nearly all temporary credit would be obtained at
bank, and cash payments would be made in nearly all transactions
between individuals. The hazards of trade would thus be greatly
diminished ; every man’s business would stand on its own basis ;
his solvency or insolvency would be an independent matter,
instead of being complicated, as now, with the solvency or insol-
vency of so many others.

12. It would tend to diversify industry to the greatest possible
extent, by affording the best possible facilities, which a mere
currency system can furnish, for engaging in the production of
all new commodities as fast as they should be invented.

13. The system would liberate specie for the uses of interna-
tional commerce.

14. The system would greatly enhance the value of real
estate, not so much by reason of the banking profits derived from
it, as of the activity it would give to agricultural, manufacturing,
and commercial industry.

15. The proposed system would tend to graduate the prices of
property throughout the country, according to one common

ADVANTAGES OF THE SYSTEM.

standard. To illustrate this point, we will suppose that, in
Massachusetts, an acre of land, which yields a net income of six
dollars per annum, over all charges, is worth ^100. Why is it
worth ^100 ? Because the rate of interest, in Massachusetts, is
six per centum per annum. The acre of land, therefore, yields
the same annual income as $100, at interest. But, in Illinois,
we will suppose, an acre of land, that yields $12, or $18, net
income per annum, (two or three times as much as the acre in
Massachusetts,) is worth but $100, the same as the acre in
Massachusetts. Why is it worth no more ? Because the rate of
interest, in Illinois, is twelve or eighteen per centum per annum ;
two or three times more than in Massachusetts. The acre of
land, in Illinois, therefore, although it yields two or three times
as much income as the acre in Massachusetts, brings only the
same price in the market, because it will yield no more annual
income than $100, at interest, in Illinois. But the proposed
system, by making currency abundant, and reducing the rate of
interest, in Illinois, to nearly or quite the same rate as in Mas-
sachusetts, would raise lands, in Illinois, to a price corresponding
with the income they yield. It would raise them to substantially
the same standard of price with the lands in Massachusetts ; so
that, if an acre of land yielded $12, or $18, net annual income,
the market price of the land would be $200, or $300, instead of
$100, as now.

In this way, this system, by making currency abundant, and
the rate of interest low, throughout the country, would tend to
graduate the prices of property by one common standard through-
out the country, according to the net income, or real value, of
the property.

16. It would benefit the condition of poor men in various
ways, to wit : First, those who should labor for wages, would
receive their wages promptly, and in money (currency). They
would thereby be enabled to make their purchases with cash, and
thus make them more advantageously than now. Secondly,
there would be no stagnations in business, by which they would

A NEW SYSTEM OF PAPER CURRENCY.

be thrown out of employment, and compelled to consume their
accumulations, and perhaps fall in debt. Thirdly, there would
be a much greater diversity of industry than now, and as a con-
sequence, all labor would be better paid than now. Fourthly,
those who should wish to hire capital, and establish themselves in
business of their own, would be much better able to do so than
now, because when all traffic should be done for cash, it would be
much more safe to loan capital to a poor man, than it is now,
when he is obliged to give, as well as to get, credit. Fifthly,
men of wealth would retire, earlier than now, from active busi-
ness, and make way for, and loan their capital to, younger men :
because they could certainly loan their capital more safely than
now, and probably more advantageously. By loaning their
capital first on mortgage, and thus getting one income from it ;
and then converting the mortgages into bank capital, and thus
getting another income from it, they would probably do better
with their capital, than to remain in business. At any rate, the
management of their capital would thus be attended with less
anxiety and risk, than if they were to remain in business them-
selves.

17. As a standard o'f value, the currency would be much
more uniform than it is now, because a dollar, invested for twenty
or thirty years, where it is sure to yield, say, six per cent, income
each year — never more, and never less — would obviously main-
tain a more uniform value than the dollar now does, which
brings, say, four per cent, income this year, and ten, fifteen, or
twenty next year.

SECURITY OF THE SYSTEM.

CHAPTER III.

SECURITY OF THE SYSTEM.

SupposiNU the property mortgaged to be ample, the system, as
a system, is absolutely secure. That is to say, the currency is
absolutely sure of redemption. The capital cannot, in any
possible event, he reduced below the amount necessary for the
redemption of the entire circulation.

The only question, then, is — what assurances have the public,
that the property mortgaged will always be ample ?

The answer is, that they have abundant assurances, as follows :

1. The mortgages will all be on record, where any body
interested can examine them, and judge for himself whether the
property holden is sufficient.

2. Each bank will find it expedient to print a large number of
copies of its Articles of Association, including copies of its
mortgages. Appended to these copies, may be copies of the
certificates of appraisers, as to the value of the property. These
certificates, if they come from men of known character and
judgment, will be entitled to confidence. Certificates also of the
assessed value of the property, on the tax lists of the town, may
be appended; and these, coming from disinterested and honest
men of good judgment, as the assessors of taxes usually are, will
he worthy of reliance.

Copies of the Articles of Association, with these certificates
appended, will be sent, by the bank, to other banks, and given to
individuals, with whom the bank wishes to establish its credit.

3. The Trustees of a bank will be generally known as men of
character and judgment — for otherwise a bank Avould be dis-
credited at once. If they are thus known, their acceptance of

A NEW SYSTEM OF PAPER CURRENCY.

the office of Trustees, will be a reasonable guaranty for the
sufficiency of the property bolden ; for such men would not be
likely to become Trustees, except for a solvent bank.

4. The abundance of undoubted currency would be such, that
the public would be under no necessity to take doubtful currency ;
and therefore doubtful currency could get no circulation at all.

5. Mortgages upon the real property of the Country, at one
third, or one half, its value, would probably furnish a great deal
more currency than could be used. No one company, therefore,
could expect to get out a circulation of more than one third, or
one half, the value of the property mortgaged. It would be of
no use for them, therefore, to mortgage their property for more
than that amount. If they should mortgage their property for
more, and attempt to get out more circulation, they would thereby
discredit their bank, and thus either fail of getting any circula-
tion at all, or certainly fail of getting as much circulation as they
might have got, if their property had been mortgaged only for a
proper amount. It, therefore, would not be for the interest of a
banking company to mortgage their property at a higher rate
than one third, or one half, its value. And at this rate, the
mortgages Avould be safe for a long series of years, (unless in
very extraordinary cases,) because, under a system of abundant
currency, real estate would always be rising in value, rather than
falling. The mortgages, therefore, would be growing better all
the while, instead of growing worse.

6. By the Articles of Association, all the mortgages, which
make up the capital of a bank, are made mutually responsible for
each other; because, (see Articles XXIX and XXXVII,) if
any one mortgage proves insufficient, no dividend can afterwards
be paid to any Primary Stockholder, until that deficiency has
been made good by the company. The effect of this provision
will be, to make all the founders of a bank look carefully to the
sufficiency of each other’s mortgages ; because no man will be
willing to put in a good mortgage of his own, on equal teims
with a bad mortgage of another man’s, when he knows that his

SECURITY OF THE SYSTEM.

own mortgage will have to contribute to make good any deficiency
of the other. The result will be that the mortgages, that go to
make up the capital of any one bank, will be either all good, or
all bad. If they are all good, the solvency of the bank will be
apparent to all in the vicinity ; and the credit of the bank will
at once be established, at home. If the mortgages are all bad,
that fact also will be apparent to every body in the vicinity ; and
the bank is at once discredited, at home.

From all the foregoing considerations, it is evident that nothing
is easier than for a good bank to establish its credit, at home ;
and that nothing is more certain than that a bad bank would be
discredited, at home, from the outset, and get no circulation
at all.

It is also evident that a bank, that has no credit at home, could
get none abroad. There is, therefore, no danger of the public
being swindled by bad banks.

7. It would be easy for a good bank to establish its credit
abroad — for it could do it by establishing its credit with other
banks. This it could do, partly by means of its credit at home,
and partly by making arrangements with other banks to redeem
its bills. In order to do this, it must be at the necessary expense
and trouble of satisfying these other banks of its solvency — that
is, by furnishing them satisfactory evidence of the sufficiency of
the mortgaged property ; a thing, that is obviously very easy to
be done, if the mortgaged property be really sufficient.

8. In addition to the security of each individual mortgage,
and of the mutual responsibility of the mortgages for each other,
there is the still further security of all the debts due to the
banks; debts a little more than equivalent (by the amount of
interest on the loans) to the amount of bills in circulation. *

In this connexion it may be added, that under the system
proposed, the banking business will be a much safer business than
it is now ; and consequently the debts due to the bank will be a
much better security for the solvency of the bank, than such
debts now are ; because, under a system, which furnishes, at all

A NEW SYSTEM OF PAPER CURRENCY.

times, a constant and ample supply of currency, industry and
trade will be subject to none of those revulsions and stagnations,
Avhich cause extensive or general bankruptcies ; the debtors of
banks will all make their sales for cash, instead of giving
credit. For these reasons the credits, given by. the banks,
will obviously be much more uniformly safe than they now
are ; and consequently the debts, due the banks, will afford a
much better security, than they now do, for the solvency of the
banks themselves.

9. , The banks themselves would act as guardians to the public
against frauds by each other. This would be done in this way.
Bank A (a solvent bank) would not receive the bills of bank B,
unless bank B had first satisfied bank A of its solvency. And
bank A would be satisfied only by personal examination of the
mortgages of bank B. In this way any unsound bank would be
discredited by the surrounding banks, and thus discredited in
the eyes of the community.

But it has been said that under the New York free banking
law, mortgages are deposited with the State Comptroller, (or
Superintendent of Banks,) as security for the redemption of the
currency ; and that when these mortgages come to be sold, the
lands often fail to bring the amount of the mortgage. And the
question has been asked, whether, under the system here pro-
posed, the mortgaged property might not prove insufficient, as
well as in New York?

The answer is, that the mortgages in New York may have
proved insufficient for either or both of two reasons.

1. They may have proved insufficient, because the lands, being
sold for specie^ at a time when specie had mostly left the
country^ could not bring what was not to he had — that is,
specie. But this is no proof that the lands were not, in ordi-
nary times, and under an abundant currency, a sufficient secur-
ity ; but only that, when specie has gone out of the country,
lands are affected like all other property, and will not, any more
than other property, bring their true value m specie.

SECURITY OP THE SYSTEM.

But under the system proposed, the absence of specie would
occasion no contraction of the currency, and no depression in the
price of lands. And therefore a mortgage, that was sufficient at
one time, would be sufficient at all times. No forced sales
would he made; but the mortgages would run (if only the
interest were paid) until the final winding up of the bank. If
the interest were not paid, the bank would take possession, and
apply the rents to the payment of the interest. Or, at worst,
they would sell the property. And it could always be sold
advantageously, because, there never being a scarcity of currency,
property in general would never be depressed.

2. The other reason, for the failure of the Hew York mortga-
ges, may have hQQn frandident appraisals.

The facilities for fraudulent appraisals are much greater under
the Hew York system, than they would be under the system
proposed, and for these reasons.

Under the Hew York system, all that is necessary to get a
bank in operation, is, that" mortgages, satisfactory to the State
Comptroller, or Superintendent of Banks, should be deposited
with him. And he accepts the mortgages on the simple appraisal
of men, appointed by himself, or satisfactory to himself. This
being done, the currency is then issued, and the public receive it,
because the State has thus virtually certified that it is well
secured.

How, it is evident that all that is necessary to get up a
swindling bank, under this system, is simply to secure the
approval of oiie man — the Comptroller, (or Superintendent of
Banks,) who knows nothing of the land himself — to the ap-
praisal of the land mortgaged. If but this one man can either
be cheated, or be induced to become himself a cheat, all the
other consequences follow ; because the currency is then issued
under his authority, and is received by the public, on the strength
of his virtual indorsement.

How, as it cannot be a very difficult matter to cheat this one
man^ or perhaps to induce him to become himself a cheat, in
4

A NEW SYSTEM OF PAPER CURRENCY.

such a case as this, it is evident that the system atFords little
security for the sufficiency of the mortgages.

But under the system proposed, no such facilities for fraud
would exist, because the credit of the bank would not rest upon
the certificate of any one man, nor upon any indorsement of the
State. The State would not indorse the currency at all, any
more than it now indorses the notes or mortgages of private
persons. Each bank would, therefore, have to stand on its own
merits, subject to the scrutiny of the whole community.

PRACTICABILITY OP THE SYSTEM.

CHAPTER IV.

PRACTICABILITY OP THE SYSTEM.

.The system is plainly practicable, provided the currency
will pass.

The only question, then, is, whether the currency will pass ?
Whether men, if left to do as they please, will buy and sell it,
in exchange for other commodities, as they now buy and sell gold
and silver coin, and bank notes, in exchange for other com-
modities ?

To answer this question, it is necessary to ascertain what it is,
that makes any thmg pass as a currency.

What, for example, is it, that makes gold and silver coin pass
as a currency ?

The answer is, that_^i7e conditions are necessary to make any
thing pass readily as a currency. First, that the thing should
have much value, and yet be of small bulk and weight ; secondly,
that it should be divisible into small parcels ; thirdly, that the
quantity and quality of each of these parcels should be accurately
measured, and then reliably marked upon the parcels themselves ;
fourthly, that these parcels should be convenient for being manip-
ulated, counted, transported, &c. ; fifthly, that the currency
should have a publicly known market value.*

These are the only conditions, that are necessary to make any
thing pass readily as a currency.

The paper currency proposed — the mortgage stock currency —
fulfils all these conditions. First, it would have much value in
small bulk and weight. Secondly, it would be conveniently

* Diamonds would not answer well as a currency, because, although they
have a market value, that value is known only to a few.

A NEW SYSTEM OP PAPER CURRENCY.

divisible into small parcels, that is, parcels as small as one dollar.
Thirdly, the quantity and quality of these parcels would be
accurately measured, and reliably marked upon the parcels them-
selves. Fourthly, the parcels would be convenient for being
manipulated, counted, transported, &c. And, Fifthly, the
currency would have a ymhlichj known market value. Its
market value, in comparison with other commodities, would cer-
tainly be as well known, as is the market value of gold and silver
coins, or bank notes.

There is no reason, then, why it should not pass, as a cur-
rency — at its market value — Avhatever that may be.

Its market value may be greater or less than' that of gold and
silver ; but this would not prevent its passing, at its market
value. Indeed the market value of any thing is only that value,
at which the thing will sell readily in the market. So that, to
say that a thing has a market value — a publicly known market
value — is equivalent to saying that it will pass as a currency,
provided it be convenient in all other respects.

Secondly.

But would this paper currency be as much in demand, in the
market, as gold and silver coins now are ? That is, would it sell
as readily as the coins now do, in exchange for other com-
modities ?

To answer this question, we must ascertain why it is that the
coins are in demand at all, as currency ; why it is that they have
a market value ; ^vhy it is that every man will accept them in
exchange for any thing he has to sell.

The solution of these queries is, that the original, jirimal
source of all the demand for them, as currency — the essential
reason why they have a market value, and sell so readily in ex-
change for all other commodities — is because they are wanted, to
he taken out of circulation, and converted into plate, jewelry,
and other articles of use.

PRACTICABILITY OF THE SYSTEM.

If they were not wanted, io he taken out of circulation^ and
wrought into articles of use, they could not circulate at all, as a
currency. No one would have any motive to buy them ; and no
one would give any thing of value in exchange for them.

The reason of this is, that gold and silver, in the state of coin,
cannot be used.* Consequently, in the state of coin, they
duce nothing to the ovmer. A man cannot alford to keep them,
as an investment, because that would be equivalent to losing the
use of his capital. He must, therefore, either exchange them for
something that he can use — something that will be productive —
yield an income ; or else he must convert them into plate, jewelry,
&c., in which form he can use them, and thus get an income
from them. '

It is, therefore, only when gold and silver coins have been
wrought up into plate, jewelry, &c., that they can be said to be
invested ; because it is only in that form, that they can be used,
be productive, or yield an income.

The income, which they yield, as investments — that is, the
income, which they yield, when used in the form of plate,
jewelry, &c., — is yielded mostly in the shape of luxurious
pleasure — the pleasure of gratified fancy, vanity, or pride.

The amount of this income we will suppose to be six per
centum per annum, on their whole value. That is to say, a
person, who is able, and has tastes that ivay, will give six dollars
a year for the simple pleasure of using one hundi-ed dollars
worth of plate, jewelry, &c.

This six dollars worth of pleasure, then, or six dollars worth
of gratified fancy, vanity, or pride, is the annual income from
an investment of one hundred dollars in gold and silver plate,
jewelry, &c.

This, be it noticed, is the only income, that gold and silver
are capable of yielding ; because plate, jewelry, &c., are the only
forms, in which they can be iised. So long as they remain

* The sale of them, as a currency, is not a use of them ; any more than the
sale of a horse is a use of the horse.

A NEW SYSTEM OF PAPER CURRENCY.

in coin, they cannot be used^ and therefore cannot yield an
income.

It is, then, only this six per centum annual income — this six
dollars worth of pleasure — Ayhich gold and silver yield, as
investments, that is really the cause of all the demand for them,
in the market, and consequently of their passing as a currency.

This fact may now be assumed to be established, viz. : that the
origin of all the demand for gold and silver, as a currency —
the essential reason why they have a market value, and sell so
readily in exchange for other commodities — is because they are
wanted, to be taken out of circulation, and converted into
plate, jewelry , 6^'c., in which form only they are capable of being
used, or of yielding an income.

By this it is not meant that every man, who takes a gold or
silver coin, as currency, takes it because he himself wants a
piece of gold or silver plate, or jewelry ; nor because he himself
intends or wishes to work it into plate or jewelry ; for such is not
the case, probably, with one man in a thousand, or perhaps one
man in ten thousand, of those who take the coin. Each man
takes it, as currency, simply because he can sell it again. But
he can sell it again solely because some other man wants it. or
because some other man will want it, in order to convert it into
articles /o?’ use. He can sell it, solely because the goldsmith,
the silversmith, the dentist, &c., will sometime come along and
buy it, take it out of circulation, and work it up into some
article for consumption — that is, for use.

This f?tal consumption, or use, thenj is the mainspring that
sets the coins in circulation, and keeps them in circulation, as a
currency.

It is solely the consumption, or use, of them, in other articles
than currency, that creates any demand for them, in the mai'ket,
as currency.

It is, then, only the value, which gold and silver have, as
productive investments, in articles of use, in plate, jewelry,
4*c., that creates any demand for them, and enables them to pass,
as a currency.

PRACTICABILITY OP THE SYSTEM.

This fact, then, being established, the following proposition is
an inevitable deduction from it, viz. : that the activity of the
demand for gold and silver coins, as a currency^ depends wholly
upon the activity of the demand for them, to be taken out of
circulation^ and converted into plate, jewelry, &c.

To illustrate this point, let us suppose a community of one
million of people, shut out from the rest of the world, having
• among them one million dollars of gold and silver coins, and
having no gold or silver among them, except in coins. If but
one dollar of these coins were to be taken out of circulation each
year, and converted into plate, jewelry, or other articles of use,
the demand for all the remaining coins, as a currency, would
wholly, or substantially, cease. And why? Solely because the
stock of coins on hand, (or the stock of gold and silver on hand,)
would be equal to a million years’ consumption. The consequence
obviously would be that gold and silver would have no value in
the market ; any more than cotton or iron would have a value in
the market, if there were a million years’ stock on hand.

But if, instead of one dollar, an hundred thousand dollars
were annually taken out of circulation, and converted into plate,
jewelry, or other articles of use, (even though their place were
annually supplied by an equal amount taken from the mines,)
this demand for the coins, to be taken out of circulation, would
create a corresponding demand for them, as a currency. And
why ? Solely because the stock of gold and silver on hand,
would be equivalent only to ten years’ consumption. This would
give them a value, where before they had none ; and enable them
to circulate, as a currency, where before they could not.

Thus it is evident that the whole demand for gold and silver,
as a currency, depends upon the demand for them for consump-
tion, as plate, jewelry, Spc. And consequently the activity of
the demand for them, as a currency, depends upon the activity
of the demand for them, for consumption. In other words, the
activity of the demand for the coins, as a currency, depends
upon the activity of the demand for them as investments, in
articles of use.

A NEW SYSTEM OF PAPER CURRENCY.

And what is true of the coins, would be true also of the paper
currency proposed. The activity of the demand for the Circu-
lating Stock, as currency, would be just in proportion to the
demand for the mortgages, or Productive Stock, as investments.
As the coins would be in demand, as a currency, solely in pro-
portion to the demand for them, to be invested in plate, jeAvelry,
&c., so the paper currency would be in demand, as currency,
solely in proportion to the demand for it, to be invested in •
mortgao-es, or Productive Stock. The demand for these two
different kinds of investments, would govern the demand for the
two different kinds of currency.

Now, in order to determine whether the paper currency pro-
posed woidd he in as much demand, in the market, as the gold
and silver coins circulating in competition with it, we have only
to determine whether the community at large would wish to make
annually as many investments, in the mortgages proposed, as
they tvoidd in plate, jewelry, <^'c. Or, perhaps, rather, the true
question is, whether as large a proportion of the whole stock of
paper currency, in the market, would be annually taken out of
circulation, and invested in the mortgages, as of the gold and
silver coin in plate, jewelry, &c. If such would be the case,
then one kind of currency would he just as much in demand as
the other.

To illustrate this point, suppose that, in this country, one
hundred millions of coin, and one hundred millions of the pro-
posed paper currency, were in circulation, in competition with
each other. And suppose that ten millions of the coin — that is,
ten per centum of the whole stock of coin — were annually
wanted to be taken out of circulation, and invested in plate,
jewelry, ^’c. ; and that ten millions also of the papier currency —
that is, ten per centum of the whole stock of paper currency —
were annually wanted, to be taken out of circulation, and in-
vested in the mortgages, the market demand for these two kinds
of currency would be precisely alike.

Or suppose that 07ie hundred millions of coin, and Jive

PRACTICABILITY OF THE SYSTEM.

hundred millions of the paper currency, were in circulation, in
competition with each other ; and that ten millions of the coin
(ten per centum of the whole stock of coin) were annually
wanted, to be taken out of circulation, and invested in plate,
jewelry, &c., and that fifty millions of the paper currency (ten
per centum on the whole stock of paper currency "J were annually
wanted, to be taken out of circulation, and invested in mortgages,
the demand, in the market, for each of the two kinds of currency
would still be precisely equal, in point of activity. That is to
say, one kind of currency would circulate just as readily as the
other.

On this theory, it is very easy to settle the question of the
comparative demand for the two different kinds of currency ; for,
although the amount of paper currency might perhaps be fifty or
an hundred times greater than the amount of gold and silver, yet
the demand for the mortgages (Productive Stock) as invest-
ments, would probably be fifty or an hundred times greater than
the demand for plate, jewelry, &c., as investments.

The reason, why there would be this greater demand for the
mortgages, as investments, is, that they would yield their income,
in money, or currency, which could be appropriated to the sup-
ply of any and all the various necessaries, wants, comforts, and
pleasures, which money can buy ; while the plate, jewelry, &c.,
as investments, yield their income mostly in the shape of a
luxurious pleasure, which most persons do not highly appreciate,
and which few persons can indulge in, to any considerable extent,
without being compelled to pinch themselves in the matter of
common necessaries and comforts.

Mankind, therefore, desire to have the great bulk of their
property invested so as to yield an income in money ; and only a
very small portion of it in such articles of fancy as plate,
jewelry, &c.

Under these circumstances, it is probable that if the paper
currency were in circulation in competition with the coin, in the
proportion of fifty or an hundred to one, the paper would be just
5

A NEW SYSTEM OF PAPER CURRENCY.

as acceptable a currency as the coin ; would be just as much in
demand ; would exchange just as readily for other commodities ;
and would equally well maintain its value in the market.

Thirdly.

Would the mortgages, or Productive Stock, be so desirable a
form of investment, as to invite capital into it, and thus create a
demand for the currency, with a view to having it redeemed by
Productive Stock ?

The answer is, that the Productive Stock would be a desirable
investment, for the various reasons of security, profit, and con-
venience.

1. As regards security, no kind of investment would exceed it.

2. As regards profit, the Productive Stock would pay two
different dividends — one to Primary holders, and the other to
Secondary holders.

The dividends to Primary Stockholders would be made up of
the interest on the mortgages, and the profits of the banking.
The rate of these dividends, therefore, will depend upon the
rate of interest on the mortgages, and the amount of banking
profits.

Probably the best rate of interest for the mortgages to bear,
would be seven per centum. This would probably be sufficient
to make the Productive Stock, in the hands of Primary
holders, worth more than par of specie, even though there
should be no profits at all from the banking business. But if
there should be profits from the banking business, they would go
to swell the dividends. So that the dividends to Primary
Stockholders would never be less than seven per cent, so long as
the banking business should simply pay expenses; and they
would rise above that rate just in proportion to the banking
profits. There can, therefore, be no doubt of the desirable char-
acter of the Productive Stock, as investments, in the hands of
Primary holders.

PRACTICABILITY OP THE SYSTEM.

In the hands of Secondary holders, the Productive Stock
would pay an unvai’jing rate of dividend, fixed by the Articles
of Association.

The currency would represent the Prodiictive Stock, in the
hands of Secondary holders, and not in the hands of Primary
holders ; because the holders of the currency, by returning it for
redemption, could generally expect to make themselves only
Secondary holders of the Productive Stock. They could rarely
expect to become Pi imary holders : and, therefore, would not
return the currency for redemption, with that view.

Probably six per centum would be the best rate of dividend, to
be fixed for the Secondary Stockholders to receive ; for that is
probably the rate, that would put the currency most nearly on a
par with specie. If the rate were fixed at seven per cent., the
Productive Stock, in the hands of Secondary holders, would be
worth more than par of specie ; and the consequence would be,
that the currency would he returned for redemption, in the hope
to get Productive Stock, rather than specie. And thus the
currency could not be kept in circulation. On the other hand, if
the rate of dividend, for the Secondary Stockholders, were fixed
at o'tAy five per cent., that might prove insufficient to make the
currency worth par of specie. Therefore six per cent, is likely
to prove a better rate than either five or seven.

Supposing, then, the rate of dividend, for Secondary Stock-
holders to receive, to be fixed at six per cent., the investment
would be sufficiently inviting to make the currency worth par of
specie. It would certainly be sufficient to attract much capital,
as every day’s observation attests. As a six per cent, stock, it
would stand on a par with United States stocks, and State stocks,
(hearing six per cent, interest,) which are, at nearly all times,
worth par of specie, and oftentimes more than par of specie, in
the market.

3. As regards convenience, the Productive Stock would be
equal to any in the market ; especially in the hands of Secondary
holders. It being in shares of, say, one hundred dollars each,

A NEW SYSTEM OF PAPER CURRENCY.

and its income (in the hands of Secondary holders) being pre-
cisely fixed, its value is precisely known. The stock is, there-
fore, in as merchantable form as capital can be invested in. It is
in as merchantable form as United States stocks, or State stocks,
(bearing fixed rates of interest,) which are nearly or quite as
merchantable as bank bills themselves.

The objections, heretofore entertained against mortgages, as an
investment, have no application whatever to stocks of this kind.
Those objections have been as follows :

1. The inconvenience of raakinor the investment, owing to the
necessity of investigating titles, making valuations, &c., all of
which processes are attended with delay, and with some danger of
mistakes or frauds. In these bank stock mortgages, these delays
and dangers would all be avoided ; because the soundness of the
titles, and the moderation of the valuations, would be notorious.
It would be a necessity, on the part of the banks, to make them
so, as a condition precedent to the banks’ getting any circulation
for their currency.

2. A second objection, to mortgages heretofore, has been, that
each mortgage was in bulk, and could not be broken. It was,
therefore, in a great degree, an unmerchantable article ; because
it was not always, nor even often, an easy thing to find a person
wishing to make an investment of that particular amount. This
objection, too, which was really a very serious one, is entirely
obviated in the case of the Productive Stock ; for here the
mortgages are divided into shares of $100, or any other amount
that may be desired ; and thus put in as merchantable form, as
any investment can possibly be in.

3. A third objection, to mortgages heretofore, has been, that
neither the interest nor the principal of the investment could be
realized from them (unless the debtor should choose to pay)
without a tedious delay ; taking possession of the premises ;
looking after rents and profits ; giving the mortgagor time (per-
haps a long time) for redemption ; or incurring delay, expense,
and trouble in advertising the premises, and selling them. In

PRACTICABILITY OF THE SYSTEM.

the case of the Secondary holders of Productive Stocky every
objection of this kind is obviated, for substantially the whole
resources of the bank (which are morally certain to be ample)
are pledged to the payment of the dividends promptly. And
even as to the Primary holders, they are not likely to be per-
sonally troubled in the matter, for the Trustees attend to all
business matters in relation to the mortgages. The only one, of
the inconveniences just mentioned, that the Primary Stock-
holders are ever likely to be subjected to, is a delay in receiving
some portion of their dividends, if the mortgagors should not be
prompt in the payment of interest. But this would so rarely
occur as to prove a very slight objection, if any, to the invest-
ment.

The result, then, obviously would be, that these stocks would
be of the very first class, as investments. Their safety, their
profit, and their merchantable character, would all conspire to
make them preeminently desirable. And the consequence would
be that the demand for them would be sufficient to make the
currency constantly in demand, as a means of obtaining them.

Under an abundant currency, such as the system would fur-
nish, and under the low rates of interest that would follow, the
Productive Stock would probably be much more in demand than
stocks, paying similar dividends, now are ; because now, a very
large amount of loanable capital is kept invested in promissory
notes, and other personal securities, on account of their paying a
better interest than stocks. But under the system proposed, the
banks would be so numerous, and the rate of interest at them so
low, that temporary loans would all be obtained at the banks,
rather than in the street ; and the capital, which is now loaned
in the street, would then, as the best alternative, seek investment
in bank stocks.

A NEW SYSTEM OF PAPER CURRENCY.

Fourthly.

The next question is, would the paper currency proposed,
maintain a par value with specie ?

This question has already been discussed somewhat; but a few
more words need to be said.

We have already seen that the paper would cii’culate, at its
true value, xvhatever that might he. It is, nevertheless, an
important question, whether its value, in the market, would be
equal to that of specie ?

The answer is, that if the rate of dividend, paid to Secondary
holders of Productive Stock, should be six per cent., that would
be sufficient to make the currency, at most times, if not at all
times, worth par of specie. If it should not be at all times, it
would be because the market value of specie would fluctuate
more than that of the paper ; thereby proving that the paper was
the most uniform standard of value.

The paper currency could never rise above the value of specie ;
because the banks would have the right to redeem theii’ circula-
tion with specie, if they should so please.

If, therefore, there should ever be a difierence .between the
value of the paper, and that of specie, it must be either because
the specie would stand constantly above the paper, or because it
would occasionally rise above it.

Whether the value of specie would stand constantly above
that of the paper, would depend upon the rate of dividend
secured to the Secondary holders of the Productive Stock. If
this rate should be six per centum, that would certainly be suffi-
cient to make the currency worth as much as specie, at times ;
because there are times, when there is plenty of specie to be
loaned at that rate.

The only remaining question, then, is, whether the specie
would occasionally rise in value above the paper ? The answer
is, that it would very rarely, if ever ; and for this reason, viz. :

PRACTICABILITY OP THE SYSTEM.

that the supply of paper would always be so abundant and con-
stant, that it is probable, if not certain, that none of those
scarcities or contractions, in the currency, which alone cause a
rise in the price of specie, would ever occur. And if they never
should occur, the paper would always be on a par with specie.
If, however, the specie should ever stand above the paper, that
would only prove, not that the paper had fallen, but that the
specie had risen. In other words, it would prove that the fluctu-
ation was in the specie, and not in the paper ; and, consequently,
that the paper was the least variable standard of value.

Under these circumstances, the paper would constitute nearly
all the currency in circulation (unless for sums below one dollar).
It would be the only currency loaned by the banks. It would be
a legal tender in payment of all debts due the banks. And it
would be sufficient for all cash purchases and sales between man
and man. And if an individual should want specie for any
extraordinary purpose — as, for exportation, for example — he
would buy the specie as merchandize, paying the difference
between that and the paper.

Still, specie would probably, at all times, be more abundant,
as a currency, in proportion to the demand, than it is now ;
because it would be so much less needed. The supply would be
greater, in proportion to the demand, than now, because the
greater supply of paper would supersede the necessity for, and
the use of, specie, as a currency.

If the proposed paper currency should be introduced through-
out the world, (as it sooner or later would be, if found to be
essentially better than any other system.) the coins would become
superabundant, unless a greater proportion of them should be
consumed in the arts, than now. And gold and silver, whether
in coin or not, if they now stand above their value for uses in the
arts, would fall to that value, and there remain, as they ought.

A NEW SYSTEM OF PAPER CURRENCY.

Fifthly.

Could the proposed system be introduced in competition with
the existing system ?

Yes, for various reasons, as follows-: —

1. The proposed sj'stem would meet with no material opposi-
tion from any quarter, unless from the stockholders in the
existing banks. Would it from them? No; because it would
probably subserve the interests of four fifths, or nine tenths, of
them, better even than the existing system. Let us see.

The stockholders of the present banks are made up of two
classes, viz. : those who hold their stock in order to lend money,
and those who hold it in order to borrow money.

Both of these classes would jv'obabhj be benefitted, rather than
injured, by the adoption of the new system.

Those, who have money to lend, could probably do better with
it, by investing it first in a mortgage, and thus getting one income
from it ; and then using the mortgage as hank capital, and thus
getting another income from it.

Their capital would thus be more safely invested than it is
now ; and would probably yield a larger income.

Those, who own bank stock, in order to borrow more than they
lend, would probably do better than they do now, because, first,
they would keep their own capital wholly in their own business ;
and, secondly, if they needed more, wmuld easily, borrow it (if
worthy of credit) on account of the abundance of banks, that
would be seeking borrowers. Thus they would be as well sup-
plied with capital as now, and with less risk and trouble ; because
they would borrow only Avhat they needed over and above their
own capital ; and this they would do directly, and without com-
plicating their business, as now, with that of a bank, by becoming
stockholders, and being compelled to look after, and take the
risks of, all the business of the bank.

PRACTICABILITY OF THE SYSTEM.

Another reason, why the stockholders in the present banks
would be benefitted by the new system, is, that very many of
tlfese stockholders are large owners of real estate. The new
system, by enabling the owners of real estate to get an income
from it, as banking capital, and still more by furnishing increased
facilities for agriculture, manufactures, and commerce, would
greatly inctease the value of real estate in general. This in-
creased value, given to real estate, would be of more importance
to the owners thereof, than any income or advantage, derived by
them from the present system of banking, over those to be
derived from the proposed system.

The opposition to the new systetn, then, (if any there should
be,) on the part of stockholders in the present banks, would be
an opposition of prejudice, and not of interest; for there are few
or no stockholders in the present banks, who would not derive
greater advantages from the new system, than from the present
one.

2. The new currency could be introduced (brought into circu-
lation) in competition with the existing paper currency, for the
further reason, that, if the existing banks should receive the
currency of the new banks, at par, the currency of the new
banks would thus be enabled to circulate, in the community, on a
par with that of the present banks. On the other hand, if the
present banks should not receive, at par, the currency of the
new banks, the new banks and their friends would systematically,
and to the extent of their ability, run upon the existing banks
for specie ; and thus compel them to suspend payments in specie.
And when the existing banks should have suspended payment in
specie, the new banks would stand better than the present ones,
in the estimation of the community ; because the existing banks
would then offer no redemption of their bills, except by receiving
them in payment of debts ; whereas the new banks would not
only offer that redemption, but also a farther redemption in
Productive Stock.

If the new banks, and their friends, should systematically run

A NEW SYSTEM OP PAPER CURRENCy,

upon the existing banks for specie, the existing banks could not
retaliate ; because the new banks could redeem with Productive
Stock, instead of specie, if they should so choose.

Thus the new banks, by drawing specie from the existing
banks, could pay specie, to the ’public, as long as the existing
banks could pay it ; and thus the new banks would put them-
selves on a par with the existing banks, so far as paying specie,
to the j)ublic, should be concerned. But the difference between
them would be, that the present banks would be compelled to pay
specie to the new banks ; but the new banks would not be com-
pelled to pay specie to the existing banks.

This advantage, which the new banks would have over the
existing ones, would enable the new banks to coerce the existing
ones, either into a suspension of specie payments, (when the new
ones would stand better than their rivals,) or else into receiving
the currency of the new banks at par — in which case the new
banks would stand at least as well as the existing ones.

3. The new banks would have an advantage over the existing
ones, in introducing their currency into circulation, by reason of
the fact that, inasmuch as their capital would cost them nothing,
(they not being obliged to keep any considerable amount of specie
on hand,) they would be able to lend money at a lower rate of
interest.

4. The currency of the new banks would go into circulation,
for the further reason, that every body would prefer it, (the cur-
rency,) on account of its superior safety, convenience, and
merchantable character, to the credit of private persons. This
preference would be sufficient to bring it into use in substantially
all those purchases and sales, which are now made on credit.
And if the currency were to go into use only to that extent, it
would be a success. But if it were to go into use to that extent,
it would obviously go into use to a still greater extent, and super-
sede, wholly or partially, the existing currency, even in those
purchases and sales, which are now made for cash.

Doubtless nine tenths, and perhaps nineteen twentieths, of all

PRACTICABILITY OP THE SYSTEM.

the persons, who now get credit, get it elsewhere than at the
banks ; in fact, never go to a bank for credit. Yet these persons
are worthy of credit, as is proved by the fact that they get it of
private persons, by purchasing commodities on credit. It would
be far better for them to get their credit at bank, and make their
purchases for cash, for they would then make them much more
advantageously. All this class of persons, therefore, could be
relied on to introduce the new currency. And they would have
no difficulty in introducing it — that is, in making their purchases
with it — because it would be preferred to their private credit,
even by those who now give them ci’edit.

5. Under the existing system, when the banks suspend specie
payments, we see that their bills not only continue to circulate,
but that they maintain a value, in the market, very nearly on a
par with specie. Why is this ? It is principally, if not solely,
because the bills of each bank are a legal tender in payment of
any debts due to that bank. Inasmuch as the public always owe
a bank more (by the amount of interest on loans) than the bank
owes the public, there is sure to be a demand for all the outstand-
ing bills of a bank, to pay the debts due to the bank — provided
the debts due to the bank be solvent. It is this fact, that keeps
the bills of the bank so nearly on a par with specie. That is, the
bills are worth very nearly dollar for dollar, because they will
pay debts to the banks, dollar for dollar, vdiich icould other-
wise have to be paid in specie.

This fact, in regard to the circulation of the bills of suspended
banks, under the existing system, sufficiently demonstrates that
the paper currency now proposed, would not only circulate, but
that it would maintain a value very nearly, if not quite, on a par
with specie ; because it would not only be a legal tender, dollar
for dollar, for all debts due to the banks, but would also be
redeemable in Productive Stock, which would always maintain,
very nearly or quite, a par value with specie, in the market. In
this latter respect (of being redeemable by Productive Stock')
the proposed currency would have a clear, and very important,

A NEW SYSTEM OF PAPER CURRENCY.

advantage over the bills of suspended banks, wbich now circulate,
and maintain their value nearly on a par with specie. There is,
therefore, no ground for saying that the new currency would not
circulate, if it were offered, when we see that a far less safe, less
redeemable, and less desirable currency, to wit, the hills of sus-
pended banks, under the present system, do not only circulate,
but maintain their value so nearly on a par with specie.

6. It may be supposed, at first view, that merchants, especially
importers, might reasonably object to the proposed currency, on
the ground that their interests require that the currency of a
nation be such as can be converted into specie, whenever they
(the merchants) may have occasion to export specie.

Admitting, for the sake of the argument, that the merchants
might suffer some inconvenience of this kind, the effect would
only be to make them more careful to keep the imports within
the exports of the country. And this benefit to the country
would counterbalance a thousand fold any inconvenience to the
merchants.

The merchants have no claim that the whole country shall
depend, for a currency, upon a commodity, or commodities, like
gold and silver, which the merchants can at pleasure carry out of
the country, leaving the nation destitute of a currency. And it
is nothing but suicide for a people to depend upon such commodi-
ties for a currency.

Under the present system, whenever the balance of trade is
much against us, the merchants export specie in such quantities
as to cause sudden and severe contractions in the currency, a
great reduction in the price of commodities relatively to specie,
(that is, a great rise in the price of specie,) general bankruptcy
among persons in debt, general stagnation in industry and trade,
and immense distress and ruin on every hand. This state of
things checks importations for a while, until the balance of trade
turns in our favor ; when the specie returns, currency expands,
credit revives, industry and trade become active, and, for a time,
we have what we call prosperity. But in a few years, the

PRACTICABILITY OF THE SYSTEM.

merchants again export the specie, and the same catastrophe is
acted over again. And such must continue to he our experience,
until our present vicious system of currency and credit shall be
corrected. This no one seems to doubt.

Certainly such evils are not to be endured by a whole nation,
from no motive but to maintain a currency, which the merchants
can export, whenever they shall have imported more goods than
the legitimate exports of the country will pay for.

It is the proper fnijction of merchants to conform their business
to the interests of the people, in the matter of currency, as much
as in the commodities bought and sold with and for it. And it
would be as legitimate for the merchants, instead of supplying
the people with such commodities as the latter desire, to dictate
to them what they may, and may not, buy, as it is for them (the
merchants) to dictate to the people what currency the latter
shall use.

It is the legitimate function of merchants to buy such com-
modities as the people have to sell, and to sell such as the people
wish to buy. So far as merchants do this, they are a useful
class. And the principle applies as well to the currency, that is
to be bought and sold, as to any other commodities. And, as
matter of fact, whatever this principle requires of merchants,
they readily acquiesce in. They adapt themselves at once to any
system of currency, that happens to prevail for the time being.
And certainly no class will more eagerly welcome any system of
banking, that will furnish them, at all times, with abundant
credit, and abundant currency, and cash payments in trade ; for
such a system would be a guaranty, to them, of a safe, constant,
and profitable trafiic, in the place of the present fitful, chaotic,
and perilous one, in which so many of their number are being
continually wrecked.

So far as the export of specie is concerned, probably not one
merchant in a hundred — perhaps not one in a thousand — has
the least interest in it. A currency, that will pay their bank
notes, is substantially all that, as a class, they demand, or desire.

A NEW SYSTEM OF PAPEB CURRENCY.

But, in truth, the system would favor, instead of injuring, the
interests even of those few merchants who occasionally do export
specie ; for it would put at their disposal nearly all the gold and
silver of the country, for exportation, or any other purpose.
That is to say, the merchants could export nearly all the gold
and silver, without affecting our home currency ; and conse-
quently without disturbing industry and trade. And this is one
of the great merits of the system. The presence or absence of
specie in the country would not be known by its effects upon the
general body of currency.

If the paper currency, now proposed, were introduced through-
out the world, gold and silver would enter very little into the
internal commerce of nations. They would go back and forth
between nations, to settle balances ; and would be found, in large
quantities, in seaports as merchandize. And merchants would
purchase them for export, as they would any other commodities.

7. The system proposed would obviously tend to the concen-
tration of specie, in large quantities, in the seaports. This would
enable the banks, in the seaports, to pay specie, if it should be
at all necessary. And this would enable the banks, in the
seaports, to furnish a specie paying currency for the interior of
the country^ when the banks themselves, in the interior, would
not pay it. The advantage of circulation, which the seaport
banks might thus obtain over the banks of the interior, would be
great enough to compensate for any little trouble it might be for
the former to pay specie. In fact, this interior circulation might
very probably become so extensive, as to be a source of great
profit to the seaport banks.

If the seaport banks should send their currency, in large
quantities, into the interior, the banks of the interior would have
little need to redeem their currency with specie. It would be
sufficient for them to redeem it with the seaport currency.

8. The system is practicable for the further reason, that it can
be introduced without the aid of hank charters, or special legisla-
tion of any kind. It stands wholly on common law principles ;

PRACTICABILITY OF THE SYSTEM.

and companies can go into business under it — as they go
into mercantile, manufacturing, or any other business — when it
suits their interest or pleasure, without asking the consent of a
body of ignorant, conceited, tyrannical legislators, who assume to
know what business it is, and what business it is not, best for men
to engage in ; instead of leaving the wants of mankind to give
direction to their industry and capital.

The banks, too, when established, would be free of all special
control, oversight, taxation, or interference by the government.
As the banks would ask no favors of the government, in the way
of charters, monopolies, or otherwise, the government would have
no more excuse for specially taxing them, or for sending Com-
missioners to pry into, investigate, or report their aflfairs, than it
now has for specially taxing the capital, or for sending Commis-
sioners to pry into, investigate, or report the affairs, of merchants,
manufacturers, or any other class of persons.

The fact, that the existing system requires special legislation
in favor of the banks, (in the shape of charters and monopolies,)
and special legislation against them, (in the shape of restrictions
of various kinds, the espionage of Commissioners, &c., &c.,) — in
short, the fact, that the banking business cannot be left subject
only to those general laws, which are applicable to all other kinds
of business, is sufficient evidence that the system is a vicious one,
and ought to be abolished.

A NEW SYSTEM OP PAPER CURRENCY.

CHAPTER V.

LEGALITY OF THE SYSTEM.

Admitting, for the sake of the argument — what is not true
in fact — that the State governments have constitutional power to
forbid private banking, their statutes for that purpose, being
contrary to natural right, must be construed to the letter ; and
the letter of few, if any, of them is such as to prohibit the
system here proposed.

Thus Maine prohibits “ any drafts, bills, or promissory notes,
or other evidences of debt.”

New Hampshire prohibits “ bills, notes, checks, drafts, or
obligations.”

Massachusetts prohibits “any note, bill, order, or check.”
Rhode Island prohibits “any note, bill, order, or check.”
Connecticut prohibits “any bill of credit, bond, promissory
writing, or note, bill of exchange, or order.”

New York prohibits “notes, or other evidences of debt.”

New Jersey prohibits “bills, notes, or other evidences of
debt.”

Pennsylvania prohibits “ any promissory note, ticket or engage-
ment of credit in the nature of a bank note.”

Ohio prohibits “any note, bill, or other evidence of debt.”
Michigan prohibits “any bills, notes, due bills, drafts, or other
evidences of debt.”

Illinois prohibits “any note, or bill.”

Wisconsin pi’ohibits “any bills, or promissory notes, or other
evidences of debt.”

Mississippi prohibits “notes, bills, certificates of deposit, or
evidences of debt.”

LEGALITY OP THE SYSTEM.

Georgia prohibits “ any bills, or promissory notes of private
bankers.”

The currency proposed — the Circulating Stock — comes
within the letter of none of these prohibitions. It consists
neither of “notes,” “promissory notes,” “orders,” “checks,”
“drafts,” “bonds,” “certificates of deposit,” “bills of credit,”
“ bills of exchange,” “due bills,” nor “tickets or engagements
of credit in the nature of bank notes.”

Although, if it should come into circulation, it may, very
likely, in common parlance, and from motives of convenience,
be denominated “bills,” yet it is not “bills,” in any legal sense,
in which that word was used at the times these statutes were
enacted.

It cannot be called “evidences of debt” — that is, of personal
indebtedness — in the sense, in which this description is evidently
used in these statutes.

It is not an “ obligation,” in the sense, in which that word is
legally used. That is to say, it is not a personal “obligation,”
in the nature of a debt, as the term debt is now understood.

It is, in law, simply hona fide certificates of bona fide stocks ;
as really so as are any certificates of railroad stocks, or of any
other stocks whatever. It is bona fide certificates of, or evidences
of title to, veritable property in land, as really so, as are deeds,
mortgages, leases, or any other written instruments for the
conveyance of title to, or rights in, real estate. As such, it
obviously comes within the letter of none of the preceding
prohibitions. The holders of the certificates are the bona fide
owners of the stocks, or property represented ; and in selling the
stocks themselves, they pass the certificates, or evidences of title.
And this is the whole matter, in a legal point of view.

The statutes, however, of some of the States are in somewhat
different terms from those already cited.

Thus Vermont prohibits “ any bill of credit, bond, promissory
writing or note, bill of exchange, order, or other paper?''

Whether this prohibition of “ any other paper as a currency,

A NEW SYSTEM OF PAPER CURRENCY.

can, in law, be held to prohibit the sale of bona fide stocks, or
property in land, and passing the certificates thereof, or the titles
thereto, is, to say the least, very doubtful.

New Jersey, in addition to the preceding prohibition of “bills,
notes, or other evidences of debt,” prohibits “ any ticket of any
denomination whatever, intended to circulate for the payment of
debts, dues, or demands, in lieu of, or as a substitute for, bank
notes or bills, or other lawful currency of the State.”

What may be the legal meaning of a “ ticket we will not
now undertake to settle ; nor whether this prohibition interdicts
the sale of bona fide stocks, and the transfer of the paper titles
thereto.

Virginia prohibits “any note, or other security, purporting
that money or other thing of value is payable by, or on behalf
of, such person” (the person issuing).

This statute clearly would not interdict the currency proposed.

The letter of the statutes of Missouri, Kentucky, Tennessee,
Alabama, North Carolina, and of the constitution of Texas, is,
perhaps, comprehensive enough to prohibit the proposed cur-
rency.

In the statutes of Indiana, Iowa, Arkansas, Maryland, and
Delaware, I have found nothing, that seemed to me to prohibit
the proposed currency.

If this currency should evade the interdict of these statutes
against private banking, it would also evade the interdict of the
State laws against usury ; for the issue of the currency by the
banks, in exchange for the promissory notes of individuals, is, in
law, a mere sale of bona fide stocks, or property, on credit, like
the sale of any other stocks, or property, on credit, and at a
price agreed on. And if these stocks should happen to sell for
more than their nominal value, that would be a matter of no
more legal importance than for railroad shares to sell for more
than their par or nominal value.

But; admitting that the language of all the foregoing prohibi-
tions are suflBciently comprehensive to embrace the currency

LEGALITY OE THE SYSTEM.

proposed, the statutes themselves, so far as they should be applied
to that currency, would nearly all of them he unconstitutional
and void, as being in conflict with the “natural right to acquire
and dispose of property ; ” a right, that is either expressly or
impliedly recognized and guaranteed by most, or all, of the
State constitutions, and bills of rights. This “natural right to
acquire and dispose of property,” includes a right to buy and
sell, as well as to produce and give away, property. The issuing
of the currency proposed, and the passing of it, from hand to
band, as a currency, would, in law, be merely a buying and
selling of the property it should represent — that is to say, the
buying and selling of hona fide property in land — like any
other property. The only difierence between it and other prop-
erty, would be, that it would be bought and sold more frequently
than other property.

But not only all these State laws against private banking, but
all State laws against usury, and all other laws whatsoever, that
assume either to prohibit, invalidate, or impair any contract what-
soever, that is naturally just and obligatory, are unconstitutional
and void, as being in conflict with that provision of the constitu-
tion of the United States, which declares that “no State shall
pass any law impairing the obligation of contracts.”

This provision does not designate what contracts have, and
what have not, an “ obligation.” It leaves that point to be ascer-
tained, as it necessarily must be, by the judicial tribunals, in the
case of each contract that comes before them. But it clearly
implies that there are contracts that have an “ obligation.” Any
State law, therefore, which declares that such contracts shall have
no obligation^ is plainly in conflict with this provision of the
constitution of the United States.

This provision also, by implying that there are contracts, that
have an “ obligation,” implies that men have a right to enter into
them ; for if men had no right to enter into the contracts, the
contracts themselves would have no obligation.

This provision, then, of the constitution of the United States,

A NEW SYSTEM OF PAPEB CURRENCY.

not only implies that certain contracts have an obligation, but it
also implies that the people have the right to enter into all such
contracts, and have the benefit of them. And any State laY",
conflicting with either of these implications, is necessarily uncon-
stitutional and void.

Furthermore, the language of this provision of the constitution,
to wit: “the obligation [singular] of contracts” [plural], implies
that there is one and the same obligation'’'’ to all ’■'■con-
tracts ” whatsoever^ that have any legal obligation at all.
And there obviously must be some one principle, that gives
validity to all contracts alike, that have any validity.

The law, then, of this whole country, as established by the
constitution of the United States, is, that all contracts, in which
this one principle of validity or “obligation ” is found, shall he
held valid ; and that the States shall impose no restraints upon
the people’s entering into all such contracts.

All, therefore, which courts have to do, in order to determine
whether any particular contract, or class of contracts, are valid,
and whether the people have a right to enter into them, is simply
to determine whether the contracts themselves have, or have not,
this one principle of validity, or obligation, which the constitu-
tion of the United States declares shall not be impaired.

State legislation can obviously have nothing whatever to do
with the solution of this question. It can neither create, nor
destroy, that “obligation of contracts,” which the constitution
forbids it to impair. It can neither give, nor take away, the
right to enter into any contract whatever, that has that “ obliga-
tion.”

But here a formidable difficulty arises. It is no less a one
than this, viz. : that neither legislatures, lawyers, nor coufts,
know, nor even pretend to know, what “the obligation of con-
tracts” is. That is to say, there is no one 2^rinciple, known or
recognized among them, by reference to which the validity or
invalidity of all contracts is determined. Consequently it is not
known, in the case of any single contract whatever, that is either

LEGALITY OF THE SYSTEM.

enforced or annulled, in a court of justice, whether the adjudica-
tion has really been in accordance with “the obligation”, of the
contract, or not. Startling, and almost terrifying, as this state-
ment is, in view of the number and importance of the contracts,
in which men’s rights are involved, and which courts are con-
tinually annulling or enforcing, the statement is nevertheless
true.

The question — what is “the obligation of contracts?” has
been several times before the Supreme Court of the United
States ; but has never received any satisfactory answer. The
last time (so far as I know) that it was brought before that court,
was in 1827, in the case of Ogden vs. Saunders (12 Wheaton,
213). Several among the most eminent lawyers in the country,
to wit: Webster, Wirt, Wheaton, Livingston, Ogden, Jones, and
Sampson, were engaged in the cause. But they all failed to
enlighten the court.

The court consisted, at that time, of seven judges. Among
these 5e^Je?^ judges, /o^^r different opinions prevailed as to what
“ the obligation of contracts ” was. Three of the judges said it
was one thing ; two of them said it was another ; one said it was
another; and one said it was another. No one opinion com-
manded the assent even of a majority of the court. And thus
the court virtually confessed that, as a court, they did not know
what “the obligation of contracts ” was.

The reasonable presumption is, that no one of these opinions
was correct ; for if either had been correct, it would have been
likely to secure the assent of the whole court, or at least of a
majority.

But, although the court could not agree as to what the obliga-
tion of contracts was, four of the justices did agree in declaring
that the insolvent law of New York did not impair the obligation
of any contracts, that were made, in New York, subsequently to
the passage of the law. To appreciate the farcical character of
this conclusion, we have only to consider that, among these four
justices, three different opinions prevailed as to what “the obli-

A NEW SYSTEM OF PAPER CURRENCY.

gation” was, which they said the law did not impair. And from
that time until now, this ridiculous opinion of these four justices,
who virtually confessed that they knew nothing of the question
they assumed to decide, has stood as law throughout the country,
and been received, by legislatures and courts, as sufficient
authority for the State legislatures to fix, prescribe, alter, nullify,
or impair, at their discretion, the obligation of any and all con-
tracts entered into subsequently to the passage of their laws.
This fact is sufficient to show that the ignorance of the Supreme
Court of the United States, as to the obligation of contracts, is
abundantly participated in by the legislatures and couids of the
States.

The writer of this will not attempt, at this time — although he
may, perhaps, at some future time — to define this constitutional
“obligation of contracts,” any further than to say that it must
necessarily be the natural obligation. That is, it must be the
obligation, which contracts have, on principles of natural law,
and natural right, as distinguished from any arbitrary, partial, or
conditional obligation, which legislatures may assume to create,
and attach to contracts.

This constitutional prohibition upon any law hnpairing the
obligation of contracts, is analogous to those provisions, in both
the State and National constitutions, which forbid any laws
infringing “the freedom of speech or the press,” “the free
exercise of religion,” and “the right to keep and bear arms.”

“The freedom of speech and the press,” which is here forbid-
den to be infringed, is not any merely arbitrary freedom, which
legislatures may assume to create and define by statute. But it
is the natural freedom ; or that freedom, to which all mankind
are entitled of natural right. In other words, it is such as each
and every man can exercise, without invading the rights of
others, and consistently with an equal freedom on the part of
others.

If “ the freedom,” here forbidden to be infringed, were only
such freedom as legislatures might, in their pleasure or discretion.

LEGALITY OF THE SYSTEM.

see fit to institute, the prohibition, instead of protecting any
“freedom of speech or the press,” would of itself imply an
authority for the entire destruction of all such “freedom.”

The same is true of “ the free exercise of religion,” and “the
right to keep and hear arms.” If the rights, which, under these
names, are constitutionally protected, instead of being the natural
rights, which belong to all mankind, were only such rights as
legislatures, in their pleasure or discretion, might assume to
create, and grant to the people, the prohibitions themselves would
impliedly authorize legislatures to destroy those very rights,
which they now are commanded to hold sacred.

So, too, “the obligation of contracts,” which the States are
forbidden to impair, is the natural obligation ; that obligation,
which contracts have of natural right, and in conformity with
natural justice ; and not any merely arbitrary, fantastic, absurd,
or unjust obligation, which ignorant, corrupt, or tyrannical legis-
latures may assume to create, and attach to contracts. Otherwise
this very prohibition against “any law impairing the obligation
of contracts,” would allow legislatures, in their pleasure or dis-
cretion, to destroy the obligation of all contracts whatsoever.

That this constitutional “obligation of contracts” is the
natw'al obligation, is proved by the language of the provision
itself, which, as has already been said, implies that “the obliga-
tion [singular] of contracts ” [plural] is one and the same
obligation for all contracts ^chatsoever, that have any legal
obligation at all. This obligation, which is the same in all
obligatory contracts, must necessarily be the natural obligation,
and not any artificial one prescribed by legislatures ; because it
would obviously be impossible for legislatures to create any one
obligation, different from the natural one, and prescribe it for, or
attach it to, all contracts whatsoever. Certainly no such thing
was ever attempted, or thought of

This obligation, which the States are forbidden to impair, is
proved to be the natural one, by still another fact, viz. : that it
is, and necessarily must be, the same in every State in the

A NEW SYSTEM OF PAPER CURRENCY.

Union ; forasmuch as the prohibition mentions but one obliga-
tion, which the States are forbidden to impair; and the prohibi-
tion to impair that one obligation is imposed alike upon all the
States. If this “obligation” were an artificial one, to be created
bj State legislatures, it would be liable to be different in every
State, since the constitution does not authorize any one State,
nor even Congress, to create any one artificial obligation, and
prescribe it as a rule for all the States.

This obligation, which the States are forbidden to impair, must
be the natural one, for the still further reason, that otherwise that
large class of contracts — by far the largest part of all the con-
tracts, which men enter into, and which courts recognize as valid,
but in regard to which no special “obligation” has ever been
prescribed by legislation — would, in the view of the constitution,
have no validity or obligation at all.

Still further. Inasmuch as the natural obligation is necessarily
the only real obligation, ■which, in the nature of things, contracts
can possibly have ; and inasmuch as all artificial or unnatural
obligations are inevitably spurious, false, and unjust, that para-
mount rule of legal interpretation, which requires that a meaning
favorable to justice, rather than injustice, shall be given to the
words of all instruments, that will bear such a meaning, requires
that “ the obligation,” which the constitution forbids to be im-
paired, should be held to be the natural and true obligation,
rather than any one of those innumerable false obligations, which
legislatures are in the habit of prescribing in its stead.

Finally. Inasmuch as the artificial obligations of contracts
are innumerable ; and inasmuch as this constitutional provision
does not particularly describe the obligation it designs to protect,
that obligation must be presumed to be the natural one, or else
the provision itself, on account of its indefiniteness, must utterly
fail of protecting any obligation at all.

The natural obligation of a contract, then, being the only one,
which courts are at liberty to regard, their first duty, on this
subject, obviously is to ascertain what the natural obligation of

LEGALITY OE THE SYSTEM.

contracts is. When they shall have done this, they Mill have
discovered an universal law for all contracts ; a laM, that must
hullify all those State laws — absurd, vexatious, tyrannical, and
unjust — Mith which the statute books of the States are filled,
having for their objects to destroy or impair men’s natural right
of making obligatory contracts, and to prescribe what obligations,
different from the natural and true one, men’s contracts shall
have.

Strictly speaking, courts have no rightful authority either to
enforce or annul a single contract, of any name or nature what-
ever, until they shall have ascertained what this constitutional, or
natural^ obligation of contracts is. But, if they will continue
to do so, it is manifestly sheer mendacity, or sheer stupidity, for
them to declare that the contracts of private bankers, and con-
tracts now termed usurious — contracts naturally obligatory
as any that men ever enter into, or as any that courts ever
enforce — have no obligation ; or that anybody can be lawfully
punished for entering into such contracts.

Furthermore, if the natural obligation of contracts is the only
obligation, which courts are at liberty to regard, they are bound
to disregard all those State laws, or acts of incorporation, of any
and every kind, whether for banking purposes or any other,
which attempt to limit the liability of stockholders to any thing
less than the natural obligation of their contracts.

In short, the only constitutional power, now existing in this
country, to prohibit any contract whatever, that is naturally
obligatory, or to impair the natural obligation of any contract
whatever, is the single power given to Congress “ to establish
uniform laws on the subject of bankruptcies, throughout the
United States.” *

* Independently of the injustice of all laws impairing the natural “obligation
of contracts,” there was a very weighty reason why the Slates should have no
power to enact bankrupt laws. If they had this power, each State might have
the motive to pass such a law for the purpose of liberating her own citizens fiom
their obligations to the citizens of other States ; when, if the law were to operate
8

A NEW SYSTEM OF PAPER CURRENCY.

There is, therefore, no legal obstacle in the way of the imme-
diate adoption of the banking system now proposed ; nor any
occasion to consult the State legislatures, or ask their permission,'
in the matter. Nor, in loaning the currency, will there be any
occasion to pay any regard to usury laws.

only as between her own citizens, she might not choose to pass the law. This
power of passing bankrupt laws was, therefore, confided solely to the general
government ; and its laws were required to be “ uniform throughout the United
States.”

In this connection, it may not be impertinent for the writer to say, that, if the
natural “ obligation of contracts ” were known, he apprehends there would be no
occasion for any bankrupt or insolvent laws at all. He apprehends there is a
natural limit to the obligation of contracts ; that, in the case of ordinary credit
contracts, time is an essential element of the contracts ; that, if there be no other
limit to the natural obligation of such contracts, the principle, that the law
requires impossibilities of no one, fixes such a limit; and that, therefore, the
most that the law can require, in the way of the fulfilment of a time contract, is
that the debtor shall exercise due integrity and diligence during the time his
contract has to run ; and that, if he do this, he can absolve himself from the
obligation of his contract, by paying to the extent of his ability, when the contract
becomes due.

This writer apprehends, however, that a more precise definition, even than
this, may be given of the obligation of a contract. But this is not the place to
attempt it.

PART SECOND.

ARTICLES OF ASSOCIATION

OP A

MORTGAGE STOCK

BANKING COMPANY.

[Entered according to Act of Congress, in the year 1860, by Ltsandee Spoonbe,
in tlie Clerk’s office of the District Court of the United States, for the District
of Massachusetts.]

ARTICLE I.

This Association shall be called the Boston Banking
Company.

ARTICLE II.

The Banking House of said Company shall always be in
the City of Boston, in the County of Suppolk, in the State
of Massachusetts.

ARTICLE III.

The Trustees of the Capital of said Association shall be

A A , B B , and C C , all of said

Boston, the survivors and survivor of them, and their successors
appointed as hereinafter prescribed.

ARTICLES OP ASSOCIATION OF

ARTICLE IV.

The Capital Stock of said Company shall consist of four
several mortgages, for the aggregate amount of One Hundred
Thousand Dollars, and interest, made to said Trustees, as

follows, to wit; One mortgage, made by F F , for the

sum of Ten Thousand Dollars and interest ; one mortgage,

made by G G , for Twenty Thousand Dollars and

interest ; one mortgage, made by H H , for Thirty

Thousand Dollars and interest ; and one mortgage, made by
I I , for Forty Thousand Dollars and interest.

Said mortgages were all entered for record, in the Registry
OF Deeds for said County of Suffolk, in the State of Massa-
chusetts, on this first day of January, in the year eighteen
hundred and sixty, and the following are copies thereof, to wit :

STOCK MORTGAGE.

[Entered according to Act of Congress, in the year 1860, by Ltsander Spooner,
in the Clerk’s office of the District Court of the United States, for the District
of Massachusetts.]

Know all Men by these Presents, That I, F F ,

of Boston, in the County of Suffolk, in the State of Massa-
chusetts, in consideration of one dollar paid me by A

A , B B , and C C , all of said Boston,

Trustees of the Boston Banking Company, the receipt of
which is acknowledged, do hereby give, grant, sell, and convey

unto the said A A , B B , and C C ,

in their capacities as Trustees of said Boston Banking Company,

A MORTGAGE STOCK BANKING COMPANY.

and to the survivors and survivor of them, and to their successors
in the like capacities, and to their assigns, the following described
premises, to wit.

[Here insert a description of the premises.]

Said premises are hereby conveyed to said Trustees, in trust,
as a part of the Capital Stock of said Boston Banking
Company, to he held, used, and disposed of by them, and their
successors in the office of Trustees, in accordance, and only in
accordance, with the terms of this mortgage, and the Articles
of Association of said Boston Banking Company ; which
Articles have been this day agreed upon, by and between the
said A A , B B , and C C , Trus-
tees, on the one hand, and me, the said F F , and

G ^ G , and H H- , and I I , on the

other hand.

Said Articles of Association consist of printed pages, each

one of which is signed, at the bottom, by the said A A ,

B B , and C C , Trustees, and also by me the

grantor, and the said G G , H H , and I

I . And nine copies thereof have been made and signed as

aforesaid, and one copy thereof delivered to each of all the afore-
named parties ; and one copy is deposited with Lysander Spooner,
of said Boston. Said Trustees are also to cause said Articles of
Association, signed on the bottom of each page as aforesaid, to be
immediately recorded in the Registry of Deeds for said County
of Suffolk ; and the copy, from which the record shall be made,
shall forever remain on file in said Registry.

To have and to hold the aforegranted premises to the said

A A , B B , and C C , Trustees as

aforesaid, and to the survivors and survivor of them, and their
successors in office, in trust as aforesaid, and to their assigns
forever.

And I the said F F , for myself, my heirs, executors,

and administrators, do covenant with the said grantees and their

ARTICLES OF ASSOCIATION OF

successors and assigns, that I am lawfully seized in fee simple of
the aforegranted premises ; that they are free of all encum-
lirances ; that I have good right to sell and convey the same to
the said grantees, their successors and assigns as aforesaid ; and
that I will, and my heirs, executors, and administrators shall,
warrant and defend the same to the said grantees, their successors
and assigns forever, against the lawful claims and demands of all
persons.

Provided, Nevertheless, That if the said F F ,

his heirs, executors, administrators, or assigns, shall pay to the

said A A , B— — B , and C C , Trustees,

the survivors or survivor of them, their successors, or assigns,
the sum of Ten Thousand Dollars, within one year after
demand therefor, in writing, on or after the fii'st day of January,
in the year Eighteen Hundred and Eighty ; and shall also
pay interest semi-annually on said ten thousand dollars, from and
after this first day of January, in the year Eighteen Hundred
AND Sixty, at the rate of Seven per centum per annum ; said
interest to be paid on the first days of July and January, in each
and every year ; and whenever either of said days shall fall on
Sunday, the interest to be paid on the Saturday next preceding ;
[and if it shall ever be fully, finally, and judicially determined
that interest at the rate of seven per centum per annum cannot
be lawfully claimed upon this contract, then this contract shall he
valid for interest at the rate of only six per centum per annum :]*

* The provision in brackets need be inserted only in those States where the
laws forbid a higher rate of interest than six per cent. Although such laws are
unconstitutional in all the States, yet as it is perhaps uncertain how the courts
will decide the question, it may be best to guard against any possible conse-
quences of an usurious contract, by making the rate conditional on the decision
of the courts.

The object of fixing the rate of interest at seven per cent., instead of six, is
that the stock may be certain to pay a six per cent, dividend, after deducting all
expenses of the company, even though no profit at all should be made by the
banking.

A MORTGAGE STOCK BANKING COMPANY.

and if interest shall ever fail to be paid on the day it shall become
due, then interest shall he paid on interest, at the rate of six per
centum per annum ; and shall also repay to said Trustees, the
survivors and survivor of them, their successors and assigns, all
such sums, with interest, (at the rate of six per centum per
annum,) as they may laiyfully expend, in pursuance of said
Articles of Association, for, and on account of, taxes, and
insurance upon, and sale of, the mortgaged premises, or any part
thereof ; then this deed shall be void to all intents and purposes.

And provided also that, at any time after four months’
continuance of any breach of any of the foregoing conditions, the
grantees, the survivors or survivor of them, their successors or
assigns, may sell and dispose of the granted premises, with all
improvements that may be thereon, at public auction ; such sale
to be in said City of Boston, without further notice or demand,
except giving notice of the time and place of sale, by properly
advertising the same in each of the six weeks next preceding the
sale, in at least three newspapers printed in said County of
SulFolk ; and in his or their own names — that is. to saj^, the
Trustees as Trustees, and their assigns as assigns — or as the
attorney or attorneys of the grantor or his assigns, for that pur-
pose by these presents duly authorized, convey the same, abso-
lutely and in fee simple, to the purchaser or purchasers accord-
ingly ; and out of the money arising from such sale, to retain all
sums, principal and interest, then secured by this deed, (whether
then or thereafter payable,) together with all costs and expenses,
including all sums paid by said grantees, the survivors and sur-
vivor of them, their successors or assigns, for or on account of
taxes and insurance on the premises ; Paying the surplus, if
any, to the said grantor or his assigns, or to the court ordering
or confirming such sale ; And such sale shall forever bar the
said grantor, and all persons claiming by or under him, from all
right and interest in the premises, either at law or in equity. It
being mutually agreed that the said Trustees, the survivors and
survivor of them, and their successors (in their capacities as

ARTICLES OF ASSOCIATION OF

Trustees, and not otherwise) and their assigns, (in their indi-
vidual capacity,) may purchase at said sale, and that no other
purchaser shall be answerable for the application of the purchase
money.

And provided further. That until default of the payment
of the said Ten Thousand Dollars, or interest, or other sum
herein secured to be paid, neither the grantees, nor either of
them, nor their successors nor assigns shall have any right to
enter and take possession of the premises.

In Witness Whereof, I, the said F F , and

I, C F , wife of said grantor, who, for the consideration

aforesaid, and of one dollar to me paid by said grantees, the
receipt of which is hereby acknowledged, do hereby release to
said grantees, the survivors and survivor of them, and to their
successors and assigns forever, all my right of or to a homestead
in or out of said real estate, and also all my right and title of or
to dower in the granted premises, have hereunto set our hands
and seals, this first day of January, in the year Eighteen
Hundred and Sixty.

Signed, sealed, and delivered, )
in presence of \

R R . \

S S . J

[Here insert copies of the other Mortgages.]

F F . [SEAL.]

C F . [SEAL.]

ARTICLE V.

Said Capital Stock shall be divided into One Thousand
Shares, of One Hundred Dollars each. These shares shall
be numbered consecutively, from one to one thousand, inclusive.
They are hereby declared to be the property of the aforesaid
mortgagors, and shall be apportioned among them, according to

A MORTGAGE STOCK BANKING COMPANY.

the amounts of their respective mortgages aforesaid, as follows,
to wit ; One Hundred Shares, numbered consecutively, from
one to one hundred, inclusive, shall be the property of the said
F F ; Two Hundred Shares, numbered consecu-

tively, from one hundred and one to three hundred, inclusive,
shall be the property of the said G G ; Three Hun-

dred Shares, numbered consecutively from three hundred and
one to six hundred, inclusive, shall be the property of the said

H H ; and the remaining Four Hundred Shares,

numbered consecutively from six hundred and one to one thou-
sand, inclusive, shall be the property of the said I I .

And the aforesaid stock shall be entered upon the books of the

Trustees as the property of the said F F , G

G , H H , and I I , according to the

apportionment aforesaid.

AKTICLE VI.

The aforesaid one thousand shares of Stock shall be called the
Productive Stock, and shall be entitled to all the dividends.

AKTICLE VII.

The dividends shall consist of the interest on said mortgages,
and the profits of the banking, and of any other business, done
by said Company.

ARTICLE VIII.

In addition to the said Productive Stock, the said Trustees
shall create another Stock, to the amount of One Hundred
Thousand Hollars, to be called Circulating Stock ; which
Circulating Stock shall be divided into shares of One Hollar
BACH. Said shares shall be numbered consecutively from one

ARTICLES OF ASSOCIATION OP

to one hundred thousand, inclusive ; and certificates, scrip, or
bills thereof, transferable by delivery, and making and declaring
said Circulating Stock to be the property of the bearers or
holders of said certificates, scrip, or bills, shall be made and
signed by the Trustees, and countersigned by the President of
the Council, and by the Cashier.

ARTICLE IX.

Said Circulating Stock shall be entitled to no dividends ; and
its value will consist wholly in its title to be received in payment
of any debts due to said Boston Banking Company, and in its
title to be otherwise redeemed, as is hereinafter provided for. In
law, it shall be in the nature of a lien upon the Productive
Stock.

ARTICLE X.

The said certificates, scrip, or bills of said Circulating Stock
may be of various denominations ; that is to say, for any number
of shares, from one to one hundred ; and each certificate, scrip,
or bill shall not only express the aggregate number of shares
it represents, but also the particular number borne by each shai’e
represented.*

All certificates, scrip, or bills of said Circulating Stock shall
be in the following form, (names and dates being changed when
necessary, and the numbers also being made to correspond with
the aggregate number of shares, and the particular number of
each share, represented in each certificate,) to wit.

* As a means of detecting counterfeits, over-issues, &c., it will be useful to
have each certificate of Circulating Stock express the particular numbers borne
by the shares it represents.

A MORTGAGE STOCK BANKING COMPANY.

• Where a Certificate represents but a single Share, the words In brackets may be left out.

ARTICLES OF ASSOCIATION OF

ARTICLE XI.

No certificates, scrip, or bills of said Circulating Stocky for a
greater amount, in the aggregate, than One Hundred Thousand
Shares, shall ever be made and signed by the Trustees, Presi-
dent, or Cashier, so as to be in existence at any one time ; but if
any of said certificates, scrip, or bills shall, at any time, be can-
celled or destroyed, either by the Trustees, or any other persons,
new certificates, scrip, or bills may be substituted therefor, except
when a corresponding amount of Productive Stock shall also
have been cancelled, as hereinafter authorized.

CHAPTER XII.

The Trustees (subject to the conditions hereinafter prescribed)
may issue said certificates, scrip, or bills of the Circulating
Stock, for circulation as a Currency, by discounting therewith, or
exchanging them for, such promissory notes, checks, di’afts,
orders, bills of exchange, or other securities, as the Trustees and
Council may see fit to accept : also by jmrchasing therewith such
furniture, books, and other personal property as said Company
may need to purchase, for the purposes of its business as a
banking company ; also by paying any debts that may at any
time be due by said Company, and any expenses that said Com-
pany may lawfully incur, in the course and prosecution of its
said business.

ARTICLE XIII.

The said certificates, scrip, or bills of said Circulating Stock,
shall, at all times, be a lawful tender, at its nominal value of One
Hollar per share, in payment of any debts due to said Boston
Banking Company. They shall also, at all times, (except as

A MOETGAGE STOCK BANKING COMPANY.

hereinafter provided for, in Article XXIY,) when presented
IN EVEN AMOUNTS OF OnE OR MORE HUNDRED SHARES, be
entitled to be redeemed, on demand, by the transfer of an equiv-
alent nominal amount of Productive Stock, unless redeemed
by the payment of gold or silver coin of equivalent nominal
value.

ARTICLE XIV.

The original holders of the Productive Stock, to wit : the

aforesaid F F , G G , H H , and

I I , shall he termed Primary Stockholders.

ARTICLE XV.

All persons, who shall hold Productive Stock by transfer,
in redemption of Circulating Stock, shall be called Secondary
Stockholders ; that is to say, unless and until they shall become
Primary Stockholders, in the manner hereinafter provided for
in Article XXI.

ARTICLE XVI.

The Secondary Stockholders shall be entitled to receive Divi-
dends on their stock, at the rate of six per centum per
ANNUM — NO MORE, NO LESS — payable semi-annually, on the
regular dividend days, at the Banking House of said Company.

ARTICLE XVII.

The Primary Stockholders shall be entitled to receive
whatever dividends may remain to be distributed, after the divi-
dends to the Secondary Stockholders shall have been paid, and
all other liahilities and obligations of the Company shall have
been cancelled — whether such dividends (to the Primary Stock-
holders) shall amount to more or less than six per centum per

annum.

ARTICLES OF ASSOCIATION OF

ARTICLE XVIII.

Whenever it shall he necessary to transfer a share of Pro-
ductive Stock, in redemption of Circulating Stock, the share
to be transferred shall be selected, by the Trustees, from such
shares (if any there shall be) as shall have been taken, by said
Company, in payment of debts of delinquent stockholders, or be
otherwise owned by said Company, in its cox'porate capacity.

But if, at any time, when it shall be necessary to transfer
Productive Stock, in redemption of Circulating Stock, there
shall be no Productive Stock owned by the Company, in its
corporate capacity, a selection of the stock to be transferred, shall
be made, by the Trustees, from among the stock of the several
Primary holders, in the most impartial and equitable manner
practicable, taking stock, in the first instance, from the largest
Primary holders, rather than from the smallest, and afterwards
apportioning the stock, taken for such purposes, equitably as may
be, among the several Primary holders, according to the
amounts of their stock respectively.* And no Productive
Stock, holden by a Secondary holder, shall ever be transferred
in redemption of Circulating Stock.

ARTICLE XIX.

Whenever any Productive Stock, less than the entire Pro-
ductive Stock of the Company, shall have been transferred,
in redemption of Circulating Stock- — that is to say, so long
as any portion of the Productive Stock shall remain in

* A Primary Stockholder can have no serious objection to the transfer
of his Productive Stock, in redemption of the Circulation ; because no divi-
dends can be paid to any of the then existing body of Primary holders, until
his transferred stock shall have been repurchased by the Company, and restored
to him, when it will stand on the same footing, in regard to dividends, as if it
had never been transferred. See Article XX.

A MORT&AGB STOCK BANKING COMPANY.

the hands either of Primary holders, or of the Company in its
corpoi’ate capacity — said Company shall have the right to buy
back, from the Secondary holder or holders, any and all such
transferred stock, by paying therefor, at the banking house of
the Company, gold or silver coin of equivalent nominal value,
and interest or dividends thereon, at the rate of six per centum
per annum, from the time said stock was thus transferred. And,
for this purpose, any dividend, that may have been paid to the
Secondary holder, since the transfer of the stock to him, and
previous to the re-purchase of it from him, shall be accounted
the same as if paid at the time of such re-purchase.

ARTICLE XX.

Whenever any Productive Stock, belonging to a Primary
HOLDER, shall have been transferred by the Company, in redemp-
tion of Circulating Stock, no dividends shall be paid to any of
the then existing body of Primary holders, until such trans-
ferred stock shall have been bought back by the Company, and
restored to the Primary holder, from whom it shall have been
taken, or to his representatives, and placed on the same footing,
in regard to dividends, with all the other Productive Stock of
the Primary holders.

ARTICLE XXI.

Whenever, if ever, it shall happen that the entire Productive
Stock of said Company shall have been transferred, from the
first body of Primary holders, (including, as such, the Com-
pany in its corporate capacity,) in redemption of Circulating
Stock, all the rights of the then existing body of Primary
HOLDERS, and especially their right to buy back such transferred
stock, from the Secondary holders, shall at once cease and become
extinct ; and the then existing body of Secondary holders shall,

ARTICLES OE ASSOCIATION OF

each and all, by reason, and in virtue, of that event, succeed at
once to all the rights, and come at once under all the responsi-
bilities, of Primary Stockholders ; and shall be deemed to be
Primary Stockholders, both in law, and in fact. And the
business of the Company shall then proceed as at first. And if
it shall ever happen that the entire Productive Stock of said
Company shall be transferred from this second body of Primary
Stockholders, in redemption of Circulating Stock, all the rights
of said second body of Primary Stockholders shall at once
cease and become extinct ; and the then existing (second) body
of Secondarg Stockholders shall, each and all, by reason, and in
virtue, of that event, succeed at once to all the rights, and come
at once under all the liabilities, of Primary Stockholders ;
and shall he deemed to be Primary Stockholders, both in law,
and in fact. And the same transfer of rights and liabilities, from
one body of Primary Stockholders, to the then existing body
of Secondary Stockholders, shall take place so often as, and
whenever, the entire Productive Stock of said Company shall
have been transferred in redemption of the Circulating Stock.*

ARTICLE XXII.

Whenever a body of Secondary Stockholders shall have become
Primary holders, in the manner provided for in Article XXI,
no dividend shall be paid to any one of them, until he shall have
surrendered his certificate or certificates of stock as a Secondary

* Of course no body of Primary Stockholders will ever suffer the entire
Productive Stock of the Company to be transferred, in redemption of Circu-
lation, in the manner provided for in this Article, until they shall become utterly
bankrupt ; that is, until all the resources of the bank, that belong to the Primary
Stockholders — such, for example, as debts due the bank — shall be utterly
exhausted ; because, by doing so, they would forfeit those resources. They will
therefore hold on to some of the Productive Stock, (though it be but a single
share,) as long as they hold on to any of the property of the Company.

A MORTGAGE STOCK BANKING COMPANY.

holder, and accepted a new certificate, or new certificates, of
stock, as a Primary holder. And such new certificate or
certificates shall be granted to him on demand, and on the sur-
render of his certificate or certificates as a Secondary holder.

ARTICLE XXIII.

The Trustees may accept loans from the Primary Stock-
holders, whenever it may be necessary or convenient, in order
to save the Productive Stock from being transferred in redemp-
tion of the Circulating Stock ; such loans to be repaid only in
the manner, and in the order relatively to other claims, herein-
after provided for in Article XXIX.

And if any Primary holder or holders of Productive
Stock shall loan, to the Company, his or their just proportion of
the amount necessary to save all the Productive Stock from
being transferred in redemption of the Circulating Stock, his or
their own Productive Stock shall be exempted from such
transfer, so long as it can be, consistently with the rights of the
holders of Circulating Stock.

But if a loan shall ever be made to the Company, by a Pri-
mary Stockholder, and, before such loan shall be repaid, the
entire Productive Stock of the Company shall have been
transferred to Secondary holders, in redemption of Circulating
Stock, as mentioned in Article XXI, such Primary Stock-
holder’s claim to have his loan repaid to him, shall be forfeited.*

ARTICLE XXIV.

The requirement, in Article XIII, that certificates, scrip, or
bills of Circulating Stock, in even amounts of one or more hun-
dred shares, shall be redeemed by coin or Productive Stock,

* This provision is necessary, for otherwise the Productive Stock would
pass into the hands of the new holders, subject to an encumbrance, and therefore
not at its par value.

AKTICLES OF ASSOCIATION OF

on demand, shall be understood subject to this proviso, viz. : that
wheuever any certificates, scrip, or bills of Circulating Stock, in
even amounts of one or more hundred shares, shall be presented
by the holder thereof, to the Company, for redemption, and the
Company shall elect to pay interest on them semi-annually, at
the banking house of the Company, on the regular dividend days,
at the rate of six per centum per annum, rather than redeem
them by coin or Productive Stock, they shall be at liberty to
do so. But if said Company shall at any time fail to pay said
semi-annual interest, on the day it shall become due, the holder
of said certificates, scrip, or bills may at once demand their
redemption, either in gold or silver coin, or in Productive
Stock, at the option of the Company; and the interest, that
shall have accrued, shall be due and payable at once, in gold and
silver coin.

Provided, however, that unless the presentation of said certifi-
cates, scrip, or bills for redemption, shall have been made at least
four months prior to the next succeeding dividend day, the interest,
which shall have accrued on such certificates, scrip, or bills, on
the first dividend day next after their presentation, shall not be
payable, except at the option of the Company, until the second
dividend day next after their presentation.

ARTICLE XXV.

Whenever certificates, scrip, or bills of Circulating Stock, in
even amounts of one or more hundred dollars, shall have been
presented for redemption, and the Company shall have elected to
pay interest on them, as provided for in Article XXIV, rather
than redeem them by coin or Productive Stock, the holder
thereof shall have the right to deposit his said certificates, scrip,
or bills with said Company, and to demand a proper voucher
therefor, specifying the amount and date of the deposit, and
acknowledging that said certificates, scrip, or bills were presented

A MORTGAGE STOCK BANKING COMPANY.

for redemption. And the certificates, scrip, or bills, thus depos-
ited, shall be immediately sealed up in a secure envelope, upon
■which the name of the depositor, and the amount, date, and
purpose of the deposit (that is, for redemption) shall be endorsed
by said Company. And the seal of said envelope shall not be
broken by said Company, nor any of its oflBcers, without the
consent of said depositor, or his representatives, given in writing,
until said Company shall have made a tender of redemption and
interest, as provided for in Articles XIII and XXIV. And the
Company shall be responsible to said depositor, and his represen-
tatives, for the safe keeping of said deposit against all accidents,
trespasses, and contingencies, of every name and nature what-
soever, until they shall have made the tender aforesaid.*

Provided, however, that if any depositor, or his representa-
tives, shall withdraw his or their deposit at any time prior to the
day on which interest thereon would become payable, neither he
nor they shall have any claim for interest during the time of
the deposit.

ARTICLE XXVI.

If, when the holder of certificates, scrip, or bills of Circidating
Stock, in even amounts of one or more hxmdred shares, shall
have presented them for redemption, and the Company shall have
elected to pay interest on them, as mentioned in Article XXIV,
he shall prefer to retain them in his own custody, rather than
deposit them with said Company, he shall be at liberty to do so,
without affecting his rights, as provided for in said Article,
except that the Company shall not be responsible for the safe
keeping of said certificates, scrip, or bills. And he shall have a
right to demand of said Company that they seal up said certifi-

* It is necessary that bills deposited for redemption, should be sealed up, for
otherwise it would be in the power of the Company to re-issue them. If re-
issued, before they had been redeemed, they would require a double redemption ;
and there would not be enough Pkoductive Stock to redeem them.

ARTICLES OF ASSOCIATION OF

cates, scrip, or bills, in a secure envelope, and endorse thereon
the amount of said certificates, scrip, or bills, and the date and
purpose of their presentation, (that is, for redemption,) and the
name of the owner thereof, and then return to himself the parcel
so sealed up and endorsed. And he shall also have the right to
demand of said Company a separate and proper voucher of the
amount of said certificates, scrip, or bills, and the date and
purpose of their presentation.

Provided^ however^ that if, when a sealed parcel of certificates,
scrip, or bills shall have been presented for redemption, and then
sealed up, and returned to the owner, he or his representatives
shall break the seal of said parcel, so as to admit of his or their
having taken out or used any of the certificates, scrip, or bills,
he and they shall thereby forfeit all claim to interest on the
whole parcel.*

* Articles XXIV, XXV, and XXVI, may be left out, if it should be thought
best; but it will probably he expedient to retain them, to prevent the too frequent
transfer and re-purchase of Peoductive Stock.

A holder of certificates, scrip, or bills of Circvlating Stock, who shall have
presented them for redemption, can have no reasonable objection to the non-
redemption of them, by the transfer of Peoddctive Stock, so long as interest
upon them is paid semi-annually; because theykeing in the meantime Sealed
up, cannot be put in circulation by the bank, so as to increase the liabilities of
the bank, or endanger their own final redemption. All he loses by the non-
immediate redemption of them, by the transfer of Peoductive Stock, is, that
he cannot have the rights of a holder of Peoductive Stock, to vote for Coun-
cillors, and to be himself a Councillor. But he is amply compensated for this
deprivation, by the fact that the Company are bound (Article XXIX) to pay
him interest, in. full, on his bills, (presented for redemption,) before any dividend
at all can be paid on the very Peoductive Stock itself, which would be trans-
ferred to him, in redemption of his bills, if he were to insist on their immediate
redemption.

He also has the assurance that the Company will redeem his bills soon as
reasonably may be, either by coin or Peoductive Stock ; because, until they
do so, the bank must pay interest on them, and the bills remain sealed up, and
the bank lose the benefit of putting them in circulation..

The reason, why the Company may not wish, at all times, to transfer Peo-
ductive Stock, in redemption of bills, immediately on their being presented
for redemption, is, that it might be very troublesome to be continually changing

A MORTGAGE STOCK BANKING COMPANY.

ARTICLE XXVII.

Certificates, scrip, or bills of Circulating Stock, in less
amounts than one hundred dollars, besides being receivable in
payment of debts due to the Company, may be redeemed by gold
and silver coin, on demand, if the Trustees shall deem it expe-
dient, and if there shall be no other claims having a preference,
by virtue of Article XXIX. But if there shall be any delay in
the redemption, whether it shall be caused by the Trustees
deeming it inexpedient to redeem in gold or silver on demand, or
by there being other claims having a preference, by virtue of
Article XXIX, then interest, at the rate of six per centum per
annum, shall be paid, at the banking house of the Company, on
all amounts of fifty shares and upwards, from and after one month
after the day of presentation ; said interest to be payable only at
the time of redemption of the principal, unless by consent of the
Company. But amounts of less than fifty shares, shall be entitled
to no interest.

the ownership of the Productiv.e Stock, by transferring it in redemption of
bills, and then re-purchasing it in a short time afterwards. The Company would,
therefore, wish to transfer Productive Stock, in redemption of bills, only
when it was likely to be a considerable time before they could re-purchase it.

The ordinary, if not the only, motive, the Company would have for not
redeeming bills immediately on presentation, by the transfer of Productive
Stock, would be, that they would prefer, and would expect soon to be able, to
redeem them with coin. And as the bills, sealed up, and drawing interest, would
be just as valuable and productive to the holder, as the same amount of Pro-
ductive Stock (held by a Secondary holder) would be, there is no good reason
for compelling the Company to transfer Productive Stock, when they would
have a right, and would most likely very soon wish, and be able, to re-purchase it.

Unless the banking business were badly conducted, — that is, unless the bank
should discount long paper, or bad paper, — there would probably never be a
necessity for the transfer of any Productive Stock at all, in redemption of the
Circulation. But the redemption (when not made by receiving the bills in pay-
ment of debts due the bank) would take place in coin, either immediately on the
presentation of the bills, or very soon after, with interest for the delay.

ARTICLES OF ASSOCIATION OF

The amounts thus presented for redemption, in order to be
entitled either to interest, or to redemption in gold or silver, shall
be deposited with the Company, and a proper voucher therefor
given by the- Company. And if the deposit shall be withdrawn
before redemption, all interest thereon shall be forfeited.

The Circulating Stock, thus deposited for redemption, shall
neither be loaned, nor re-issued, by the Company, until it shall
have been redeemed. But it shall be sealed up in a secure
envelope, and the amount, date, and purpose of the deposit, (that
is, for redemption,) with the name of the depositor, endorsed
thereon. And the seal of the envelope shall not be broken by
the Company, until they shall have tendered redemption in gold
or silver coin, of equivalent nominal value, with interest where
interest shall be due. And the Company shall be responsible to
said depositor, and his representatives, for the safe keeping of
said deposit, against all accidents, trespasses, and contingencies,
of every name and nature whatsoever, until they shall have made
the tender aforesaid. And said deposit shall be redeemed, in the
order in which it stands, relatively to other claims, in Article
XXIX.*

* This Article is, perhaps, not very important. Its object is to make it for
the interest of the holders of Circulating Stock, in less amounts than one hundred
shares (dollars), to dispose of it in the course of business, and let it come back to
the bank, either in payment of debts due to the bank, or in even amounts of one or
more hundred shares (dollars), so as to give the Company an opportunity to redeem
it with Productive Stock, rather than coin, if they shall choose to do so.
Such would be the common course of things without this provision. Yet as it
may sometimes happen that it would be for the interest of a holder of Circulating
Stock, of a less amount than one hundred shares (dollars), to return it for redemp-
tion in gold or silver, rather than dispose of it in the course of business, it is
perhaps proper that a redemption, in gold and silver, should be provided. This
Article, therefore, provides a redemption, but one a little less favorable than
where the amount is one or more hundreds.

Where a bank is prosperous, and above the necessity of transferring Produc-
tive Stock at all, in redemption of their Circulation, it will be for their interest
(as promoting the reputation of the bank) to redeem their Circulation at once,
with gold and silver, when presefited in amounts less than SlOO, rather than
receive it on deposit and pay interest.

A MOKTGAGE STOCK BANKING COMPANY.

ARTICLE XXVIII.

Productive Stock may be bought back from the Secondary
holders, and Circulating Stock (presented and waiting for
redemption) may be redeemed, by the Company, on the regular
semi-annual dividend days, without giving any previous notice to
the holders of such stock.

But if the Company shall ever buy back Productive Stock
from the Secondary holders, or shall ever redeem Circulating
Stock (that shall have been presented, and be waiting for I’edemp-
tion) at any time other than on a regular semi-annual dividend
day, they shall give the holder of such Productive or Circida-
ting Stock reasonable notice thereof beforehand, if he or his
known attorney, shall be a resident of the State of Massachusetts,
to the end that he or his attorney may have opportunity to be
present, and receive the money for his stock at the time it shall
be tendered.

ARTICLE XXIX.

All the resources of said Company (including the interest on
the mortgages) shall be applied in, and only in, the following
manner, giving preference to each of the several classes of claims,
liabilities, and obligations, in the order in which they are here
enumerated, to wit :

1. To the payment, in full, of all the necessary and current
expenses of the Company, and any and all liabilities and obliga-
tions, of every name and nature whatsoever, except those here-
after enumerated in this Article.

2. To the payment, in full, of all interest due on certificates,
scrip, or bills of Circidating Stock, that shall have been pre-
sented, in even amounts of one or more hundred shares, for
redemption, and not been redeemed.

ARTICLES OF ASSOCIATION OF

3. To the payment, in full, of a semi-annual dividend, of six
per centum per annum, on all such Productive Stock, as shall
he in the hands of Secondary Stockholders.

4. To the redemption of all such certificates, scrip, or bills of
the Circulating Stock., as shall havfe been presented, in even
amounts of one or more hundred shares, and be waiting for
redemption.

5. To the redemption of all Circulating Stock, presented and
waiting for redemption, in amounts less than one hundred
shares ; with interest where interest shall be due.

6. To the re-purchase of all such Productive Stock, as
shall be in the hands of Secondary holders.

7. To the payment of all loans made to the Company by the
Primary Stockholders, with interest on the same, at a rate
agreed on, not exceeding six per centum per annum.

8. To the payment of the regular salaries of the Trustees,
(independently of their share of the profits,) and any compensa-
tion that may be allowed to the President of the Council.

9. To the payment of all dividends, made ttp exclusively of
interest on the mortgages, to the Primary Stockholders.*

10. To the payment of dividends, made %ip exclusively of
profits, to the Primary Stockholders, and to the Trustees
their proportion of the profits.*

And especially no dividends, made up either of interest or
profits, shall ever be paid to the Primary Stockholders, until
all the other expenses, liabilities, obligations, interest, and divi-
dends (to Secondary Stockholders') before mentioned to be paid,

* It is necessary that a distinction should be made between dividends, made
up of interest, and those made up of profits, at least so long as any Pboductite
Stock shall remain in the hands of the original mortgagors, or their assigns
(holders of the mortgaged estates) as Peijiart holders; because the actual
payment, by them, of interest, wliich is to be at once returned to them as divi-
dends, will be unnecessary (see Article XLII). The Company may also wish
the profits to accumulate as a reserved fund, instead of being distributed ; when
they might not be willing actually to pay interest (not otherwise needed) simply
to create a reserved fund.

A MORTGAGE STOCK BANKING COMPANY.

shall have been paid in full ; and all the Circulating Stocky
presented and waiting for redemption, shall have been redeemed ;
and all Productive Stock, in the hands of Secondary holders,
shall have been re-purchased, and restored to its Primary
holders.

ARTICLE XXX.

The Trustees, or any two of them, or the sole Trustee, if at
any time there should be but one, of said Boston Banking Com-
pany, are and is hereby authorized and empowered to transfer so
much Productive Stock of the Primary Stockholders, in
redemption of the Circulating Stock of said Company, as it may
become necessary or proper to transfer for that purpose.

And whenever Productive Stock is to be thus transferred,
from a Primary Stockholder, in redemption of Circidating
Stock, the transfer shall be made upon a book kept for that
purpose, and in the form following, (names, dates, and numbers
being made to correspond with the facts in each case,) to wit :

Cransfer of ^robuctik Stork iit |lri)cmjition of
Circulating Stock.

[Entered according to Act of Congress, in the year 1860, by Lvsander Spooner,
in the Clerk’s office of the District Court of the United" States, for the District
of Massachusetts.]

Boston,} BOSTON BANKING COMPANY. 1

Massachusetts.

Transfer No. 115. Ten Shares. Nominal value, ^1000.

From 0 0 , Primary Stockholder.

T o P P , Seco! dtiry Stockholder.

Know all Men, That we, A A . B B ,

and C C , Trustees [or I, A A , sole Trustee]

of the Boston Banking Company, by virtue of the power granted

ARTICLES OF ASSOCIATION OF

US [or me] by the Articles of Association of said Company, dated
January 1st, 1860, do hereby transfer, and have hereby trans-
ferred, Ten shares of the Productive Stock of said Company,

from 0 0 , the Primary holder thereof, to P

P , of -, in the County of , in the State of ,

in redemption of an equivalent nominal amount of the Cir-
culating Stock of said Company. Said shares are numbered
101, 102, 103, 104, 105, 106, 107, 108, 109, and 110 respect-
ively, [or — consecutively from 101 to 110 inclusive,] and are to

be holden by said P P , as a Secondary Stockholder,

and subject to the provisions of said Articles of Association, and
especially subject to the right of said Company to re-con vey any
or all of said shares to the said 0 0 , or his representa-

tives, whenever said Company shall have tendered or paid to said

P P , or his representatives, in gold or silver coin, the

full nominal value of the share or shares to be so re-conveyed,
with all such interest and dividends thereon as shall be due at
the time of such re-conveyance.

Dated at Boston, this day of , 1860.

Trustees of the
Boston Banking
Company.

E E , Cashier.

A A

B B

C C-

ARTICLE XXXI.

The Trustees, or any two of them, or the sole Trustee, if at
any time there shall be but one, of said Boston Banking Com-
pany, are and is hereby authorized and empowered to re-convey
any and all Productive Stock of the Secondary Stockholders,
to the Primary holders, from whom it shall have been taken,
or to their representatives, upon paying or tendering to said
Secondary Stockholders, at the banking house of said Company,

A MORTGAGE STOCK BANKING COMPANY.

in gold or silver coin, the full nominal value of the Productive
Stock so re-conveyed, with all such interest or dividends thereon
as may be due at the time of such re-conveyance.

And whenever Productive Stock is to be re-conveyed from
a Secondary Stockholder to the Primary Stockholder, from
whom it shall have been taken, or to his representatives, the
re-conveyance shall be made upon a book kept for that purpose,
and in the form following, (names, dates, and numbers being
made to correspond with the facts in each case,) to wit :

le-toirfifpnfe of ^robuftik Stock from a Scconkrg
to a Irimarg

[Entered according to Act of Congress, in the year 1860, by Lysandee Spooner,
in the Clerk’s ofiBce of the District Court of the United States, for the District
of Massachusetts.]

Boston,} BOSTON BANKING COMPANY. { 3Iassacbu3ett3.
Re-conveyance No. 28. Six Shares. Nominal vahie, i600.

From P P , Secondary Stockholder.

To 0 O , Primary Stocrholdee.

Know all Men, That we, A A , B B ,

and C C , Trustees [or I, A A , sole Trustee]

of the Boston Banking Company, by virtue of the power granted
us [or me] by the Articles of Association of said Company, dated
January 1st, 1860, do hereby re-convey, and have hereby re-
conveyed, Six shares of the Productive Stock of said Com-
pany, from P P , a Secondary holder thereof, to 0

0 , the Primary holder thereof; having tendered [or paid]

AKTICLES OP ASSOCIATION OP

L>6

to said P P , in gold or silver coin, the full nominal

value of said Six shares, and all interest and dividends due
thereon, up to this date. Said shares are numbered 101, 102,
103, 104, 105, and 106, respectively, [or — consecutively from

101 to 106 inclusive,] and were transferred from said 0

0 to said P P , on the day of ,

1860, in redemption of Circulating Stock.

Dated at Boston, this day of , 1860.

Trustees of the
Boston Banking
Company.

E E , Cashier.

A A

B B

C C-

ARTICLE XXXII.

Whenever Productive Stock shall be transferred, by the
Trustees, in redemption of Circulating Stock, credit for the
same shall be given, in a book kept for that purpose, to the
Primary Stockholder, from whom it shall have been taken.
And when such Productive Stock, or any part thereof, shall
be re-conveyed to such Primary Stockholder, or to his repre-
sentatives, the proper debit shall be entered against the original
credit.

ARTICLE XXXIII.

The Trustees shall grant to each and every Primary Stock-
holder, a certificate, or certificates, for his or her Productive
Stock, in the following form, (names, dates, and numbers being
made to correspond with the facts in each case,) to wit ;

A MORTGAGE STOCK BANKING COMPANY.

^rimarg StucWjokr's fctifeate of ^^rokdik Stock

OF THE FOLLOWING NAMED

MORTGAGE STOCK BANKING COMPANY.

[Entered according to Act of Congress, in the year 1860, by Ltsander Spooner,
in the Clerk’s office of the District Court of the United States, for the District
of Massachusetts.]

Capital Stock, $ 100,000:

In Mortgages hearing Seven per Cent. Interest.

Productive Stock, $100 per Share.

Boston,} BOSTON BANKING COMPANY. I MTachfseSs^'

Certificate No. 64. Seven Shares. Nominal value, $700.

Be it Known, That F F , of Boston, in the County

of Suffolk, in the State of Massachusetts, is the proprietor, and a
Primary holder, of Seven Shares of the Productive Stock
of the Boston Banking Company : a Mortgage Stock Bank-
ing Company, having their Banking House at Boston,* in the
County of Suffolk, in the State of Massachusetts ; which shares
are numbered 91, 92, 93, 94, 95, 96, and 97, respectively [or —
consecutively from 91 to 97 inclusive], and are of the nominal
value of Seven Hundred Dollars, and are holden by said
F F , as a Primary holder, and subject to the pro-

visions of the Articles of Association of said Boston Banking
Company, dated January 1st, 1860 ; and are transferable only
by written assignment, of the form subjoined ; the transfer to be
complete only on the assignment being recorded in the books of

ARTICLES OF ASSOCIATION OF

the Company, and the surrender of this certificate, when a new
one will he issued.

Dated at said Boston, this tenth day of August, 1860.

[SEAL.]

Trustees of the
Boston Banking
Company.

E E , Cashier.

To the above certificate shall be added a blank conveyance, in
the following form, (names, dates, and numbers being made to
correspond with the facts in each case,) to wit :

Irimarg SWljolkf s Sale of Sroburtibe Stock

OF THE FOLLOWING NAMED

MORTGAGE STOCK BANKING COMPANY.

[Entered according to Act of Congress, in the year 1860, by Ltsandee Spooner,
in the Clerk’s office of the District Court of the United States, for the District
of Massachusetts.]

Capital Stock, $100,000:

In Mortgages hearing Seven per Cent. Interest.
Productive Stock, $100 per Share.

Boston,} BOSTON BANKING COMPANY.

Shares. Nominal value, $ .

Know all Men, That I, , of , in the County

of , in the State of , being the true owner, and a

Primary holder of Share of the Productive Stock

A MORTGAGE STOCK BANKING COMPANY.

of the Boston Banking Company : a Mortgage Stock Bank-
ing Company, having its Banking House in Boston, in the
County of Suffolk, in the State of Massachusetts ; which share ,

numbered respectively, [or — consecutively from

to inclusive,] for value received, have given, granted, sold,

and assigned, and do hereby give, grant, sell, and assign to ,

of , in the County of , in the State of ,

heirs and assigns forever, the said share of Productive

Stock, and all my right, title, interest, and property in and to

the same. To have and to hold the same to the said ,

heirs and assigns, as Primary holders thereof, to their

sole use and benefit, subject only to the Articles of Association
of said Company ; which Articles are dated January 1st, 1860.

Witness my hand and seal, this day of

in the year 18 — .

Witness.

Boston, , 18 — . Kecorded in the book of Sales of

Productive Stock by Primary Stockholders, No. ,

Page .

E E , Cashier.

ARTICLE XXXIV.

The Trustees shall grant to each and every Secondary Stock-
holder a certificate, or certificates, for his or her Productive
Stock, in the following form, (names, dates, and numbers being
made to correspond with the facts in each case,) to wit :

ARTICLES OF ASSOCIATION OF

Bwontori Cn“ti&atc ijf |r0ljadilji ^tork

OF THE FOLLOWING NAMED

MORTGAGE STOCK BANKING COMPANY.

[Entered according to Act of Congress, in the year 1860, by Ltsandee Spoonee,
in the Clerk’s office of the District Court of the United States, for the District
of Massachusetts.]

Capital Stock, $100,000:

In Mortgages bearing Seven lier Cent. Interest.

Productive Stock, $100 per Share.

Secondary Stockholders are paid Dividends of Six per cent,
per annum.

Boston,) BOSTON BANKING COMPANY. )

Massachiisetts.

Certificate No. 25. Nine Shares. Nominal value, $900.

Be IT Known, That L L , of Roxbury, in the

County of Norfolk, in the State of Massachusetts, is a Secondary
holder of Nine Shares of the Productive Stock of the
Boston Banking Company : a Mortgage Stock Banking
Company, which has its Banking House at Boston, in the County
of Suffolk, in the State of Massachusetts ; which shares are num-
bered 31, 32, 33, 34, 35, 36, 37, 38, and 39, respectively, [or —
consecutively from 31 to 39 inclusive,] and are of the nominal
value of Nine Hundred Dollars; and are holden by said

L L , as a Secondary holder, subject to the provisions

of the Articles of Association of said Boston Banking Company,

A MORTGAGE STOCK BANKING COMPANY.

dated January 1st, 1860 ; and are transferable only by a written
assignment of the form subjoined ; the transfer to be complete
only on the assignment being recorded in the books of the Com-
pany, and the surrender of this certificate, when a new one will
be issued.

Dated at said Boston^ this 2i)th day of March^ 1860.

• ') Trustees of the

[seal.] B B . V Boston Banking

C C . 1 Company,

E E , Cashier.

To the above certificate shall be added a blank conveyance in
the following form, to wit :

OF THE FOLLOWING NAMED

MORTGAGE STOCK BANKING COMPANY.

[Entered according to Act of Congress, in the year 1860, by Ltsander Spooner,
in the Clerk’s office of the District Court of the United States, for the District
of Massachusetts.]

Capital Stock, ^100,000:
hi Mortgages hearing Seven joer Cent. Interest.
Productive Stock, $100 per Share.

Secondary Stockholders are paid Dividends of Six per cent,
per annum.

Boston,} BOSTON BANKING COMPANY.

Shares. Nominal value,, $ .

Be it Known, That I, , of , in the County

of , in the State of , being the true owner, and a

ARTICLES OF ASSOCIATION OF

Secondary holder of share of Productive Stock of the

Boston Bankinu Company : a Mortgage Stock Banking
Company, having its Banking House in Boston, in the County

of Suffolk, in the State of Massachusetts ; which share ,

numbered respectively, [or — consecutively from to

inclusive] for value received, do hereby give, grant, sell,

and assign, and have hereby given, granted, sold, and assigned,

to , of , in the County of , in the State

of , all my right, title, interest, and property in and to

the said share of Productive Stock.

To have and to hold the same to the said , heii’s

and assigns, as- Secondary holders, and not otherwise, to their
sole use and benefit, subject only to the Articles of Association
of said Boston Banking Company ; which Articles are dated
January 1st, 1860.

Witness niy hand and seal, this day of , hi

the year 18 — .

Witness.

Boston, , 18 — . Recorded in the book of Sales

of Productive Stock by Secondary Stockholders, No. ,

Page

E E , Cashier.

ARTICLE XXXV.

Whenever Productive Stock of said Company shall have
been transferred to, and be in the hands of, a Secondary Stock-
holder, and the Primary Stockholder, from whom it shall
have been taken, or his representatives, shall wish to convey all
his or their right and property in it, and all his or theii' right
and claim to have it re-purchased and restored to him or them by

§ BEAL. 0

A MORTGAGE STOCK BANKING COMPANY.

the Company, the conveyance of such right, property, and claim
shall he made in the following form, (names, dates, and numbers
being made to correspond with the facts in each case,) to wit ;

OF ms RIGHT TO PRODUCTIVE STOCK IN THE HANDS OF A

[Entered according to Act of Congress, in the year 1860, by Ltsander Spooner,
in the Clerk’s office of the District Court of the United States, for the District
of Massachusetts.]

Boston,} BOSTON BANKING COMPANY. l^aTcMseS^.'

Twelve Shares. Nominal value, $1,200.

Whereas, on or before the tenth day of September, 1860,
Twelve Shares of the Productive Stock of the Boston Bank-
ing Company, (a Mortgage Stock Banking Company, having
its Banking House in Boston, in the County of Suffolk, and State

of Massachusetts,) being then the property of F F ,

of , in the County of , in the State of , as

a Primary holder thereof, and being numbered 63, 64, 65, 66,
67, 68, 69, 70, 71, 72, 73, and 74, respectively, [or — consecu-
tively from 63 to 74 inclusive,] were transferred, by the Trustees

of said ' Company, from said F F , to K K ,

of , in the County of , in the State of , in

redemption of Circulating Stock ; and are now holden by said

SECONDARY STOCKHOLDER.

Capital Stock, $100,000;

In Mortgages hearing Seven -per Cent. Interest.

Productive Stock, $100 per Share.

ARTICLES OF ASSOCIATION OF

K K , his heirs or assigns, as Secondary holder or

holders thereof.

And whereas said Company are hound by the Articles of
Association of said Company, (dated January 1st, I860,) to
re-purchase said shares of Productive Stock, and restore them

to said P F , or his representatives, if the resources of

said Company will enable them to do so consistently with said
Articles of Association.

And whereas, as will appear by the records of said Company,

I, M M , of , in the County of , in

the State of , now have, hold, and possess, all the

rights in said shares of Productive Stock, which he, the

said F F , or his representatives can have, hold, or

possess, to wit, — the right and claim to have said shares re-pur-
chased by said Company, and restored to the Primary holder
thereof, his heirs or assigns, provided such re-purchase can be
made consistently with said Articles of Association.

Now, therefore, be it known that I, the said M M ,

for value received, have given, granted, sold, and assigned, and

do hereby give, grant, sell, and assign to S S , of

, in the County of , in the State of , all my right,

title, and interest in said Twelve Shares of Productive Stock,
III and all my right and claim to have the same re-purchased and
restored to me by said Company. And I hereby request, author-
ize, and require the Trustees of said Boston Banking Com-
pany, whenever (if ever) they shall re-purchase said shares, or
any of them, from the Secondary holder thereof, to convey the

same to the .said S S ,’ his heirs or assigns, instead of

restoring them to myself, my heirs or assigns. To have and to

hold the same to the said S S , his heirs and assisns

forever, as Primary holders thereof.

Witness my hand and seal, this
the year 18 — .

day of

M-

Witness Y-

§ SEAL, p

A MORTGAGE STOCK BANKING COMPANY.

Boston, October 10, 18 — . Recorded in the book of Sales
bj Primary Stockholders, of their Right to Productive

Stock in the hands of Secondary Stockholders, No. ,

Page .

E E , Cashier.*

And such sale shall not be complete until the above Deed shall
be recorded by the Company, in a book kept by them for that
purpose. Nor shall any dividend be paid to the grantee, named
in said Deed, until the Deed shall have been recorded as afore-
said, and a new certificate or certificates for the stock issued to
him.

ARTICLE XXXVI.

The Trustees are hereby authorized, and if, in their judgment,
it shall he necessary or expedient, they are required, to pay the
taxes on any or all the mortgaged estates before mentioned, and
to keep all buildings and fixtures on each of said estates, insured,
at the expense of each estate respectively, for the benefit of said
Company. And the amount of such taxes, and the expense of
such insurance, and all necessary and proper expenses, incurred
by the Company, in and about such insurance, and in recovering
the amount insured (having been first paid or assumed by the
Company), shall be payable to the Company, by the mortgagor,
or his representatives (the holders of the mortgaged estate) with
interest (at the rate of six per centum per annum) on the day on
which his or their next semi-annual interest on the mortgage shall
become due.

Any moneys recovered by the Company on the insurance of
any mortgaged estate before mentioned, shall be applied in the
following manner, to wit :

* The form of the above Deed is somewhat awkward, owing to the fact that
it was necessary to adapt it to the cases of all sales, whether by the Primary
Stockholder himself, (from whom the stock should have been transferred,) or
by his heirs or assigns. Had it been necessary to adapt the form only to the first
of these cases, it might have been made a little more simple.

ARTICLES OF ASSOCIATION OF

1. To the payment of all expenses, incurred by the Company,
for, or on account of, such insurance, or in recovering the amount
insured ; and also the amount paid as taxes, iv ith interest on all
such sums from the time they were paid.

2. To the payment of any interest that may be due, and re-
maining unpaid, upon the mortgage of said estate.

Of the sum, if any, then remaining of said insurance money,
one or more of the following dispositions shall he made, at the
discretion of the Trustees, to wit :

3. If the then present holder or holders of the mortgaged estate,
shall be a Primary holder or holders of any Productive
Stock, the Trustees may cancel the same, and pay over to him
or them an equivalent nominal amount of the insurance money,
provided they can do so without injustice to any one, and es-
pecially without throwing any unjust or unequal burdens upon
the other Primary holders.

And if any profits or dividends shall be equitably due, on the
Productive Stock thus cancelled, they shall be paid.

4. Or the said insurance money may be appropriated to the
use of the Company, and in consideration thereof the Company
shall incur the obligation to cancel an equivalent nominal amount
of Productive Stock. And if they shall be able to purchase
the Productive Stock to be cancelled, by paying less than its
nominal value, the profit shall belong to the Company. But if,
in order to get the necessary amount of Productive Stock, to
be cancelled, it shall be necessary for them to pay more than its
nominal value, the loss shall fall upon the Company.

5. And if the amount of said insurance money shall not be
precisely equal, in nominal amount, to the nominal value of any
number of shares of Productive Stock, the remainder, or frac-
tional part of the nominal value of one share of Productive
Stock, shall either be paid over to the holder of the mortgaged
estate, and no reduction in the mortgage be made on account of
such remainder, or fractional part ; or it shall be retained by the
Trustees, and applied to the payment of any future interest on
the mortgage, or taxes on the mortgaged property, or of any

A MOKT&AGB STOCK BANKING COMPANY.

future expenses for, or on account of, the insurance of the prop-
erty mortgaged ; or the Trustees may, if they deem it expedient,
accept it as the equivalent of another share of Peoductive
Stock, which share shall be cancelled at the expense of the
Company.

And whenever any Productive Stock shall be cancelled, as
provided for in this Article, an equivalent nominal amount of
Circulating Stock shall also be cancelled. And the mortgage
on the estate shall also he released, in whole, or in part, as the
case may require.

ARTICLE XXXVII.

If ever the interest on any of the aforesaid mortgages, or the
money paid by the Company for taxes, (with interest on the
same,) or for, or on account of, insurance on any of the mortgaged
property, (with interest on the same,) shall not be paid when it
shall become due, the Trustees may, in their discretion, proceed
in any one or more of the following modes, to wit :

1. The Trustees may take possession of the mortgaged prop-
erty, and apply the rents and profits thereof to the payment of
the interest due on the mortgage, and the money due for taxes,
or for, or on account of, insurance, and all expense and trouble
incurred by the Trustees in managing said mortgaged estate.

2. If the owner or owners of the mortgaged property shall be,
at the time, a Primary holder or holders of any Productive
Stock of the Company, the Trustees, if they can do so without
injustice to any one, and without throwing any unjust or unequal
burden upon other Primary Stockholders, may cancel any
amount of such Productive Stock, not exceeding the nominal
amount of the mortgage, and then release the mortgage for a
corresponding amount. But such Productive Stock shall not
be thus cancelled, without giving the holder or holders thereof at

least months’ notice that it will be cancelled, unless payment

be made.

ARTICLES OF ASSOCIATION OF

3. If any of the conditions of the mortgage shall remain

unfulfilled for the space of months, the Trustees may sell

the mortgaged estate, at public auction, after having properly

advertised the same for sale, at least once in each of the

successive weeks next preceding the sale, in newspapers in

the county, where the estate is situated. Out of the proceeds of
the sale, the Trustees shall first pay all expenses of said sale, and
all interest due on the mortgage, and all money remaining unpaid,
that shall have been expended by the Company, for taxes, and
for or on account of insurance, on said mortgaged property, with
interest on the same.

Out of the amount then remaining from the proceeds of the
sale, a sum equal to the nominal amount of the mortgage, (if so
much there shall be,) shall go into the treasury of the Company;
and the excess, if any there shall be, shall be paid over to the
mortgagor, or his representatives (the holders of the mortgaged
estate).

And in consideration of the sum, that shall thus have gone
into the treasury of the Company, (even though it shall be less
than the nominal amount of the mortgage,) the Company shall
incur the obligation to cancel an amount of Productive Stock
nominally equal in value to the nominal amount of the mortgage.
And if they shall be able to purchase and cancel the necessary
amount of Productive Stock, by paying a less sum for it than
that which shall have gone into the treasury of the Company as
aforesaid, the profit shall belong to the Company. But if, in
order to get the necessary amount of Productive Stock to be
cancelled, they shall be compelled to pay more than the amount
that shall have gone into the treasury of the Company as afore-
said, the loss shall fall on the Company.*

Whenever any Productive Stock shall be cancelled, in pur-
suance of this Article, an equivalent nominal amount of Circu-
lating Stock shall also be cancelled.

* This provision makes the mortgages mutually responsible for the solvency
or sufficiency of each other.

A MORTGAGE STOCK BANKETO COMPANY.

ARTICLE XXXVIII.

If any holder or holders of any of the before-named mortgaged
estates shall, at any time, 'wish to have his or their estate released
from the mortgage, and shall also be, at the same time, a Pri-
mary HOLDER or HOLDERS of PRODUCTIVE Stock, the Trustees,
with the consent of the Council, may cancel such stock, and
release the mortgage for a corresponding amount, provided it can
be done without injustice to any one, and without throwing any
unjust or unequal burden upon other Primary holders of Pro-
ductive Stock.

And whenever any Productive Stock shall be cancelled, in
pursuance of this Article, an equivalent nominal amount of Cir-
culating Stock shall also be cancelled.

ARTICLE XXXIX.

Whenever any shares of either, Productive or Circulating
Stock shall be cancelled, a record shall be preserved of the par-
ticular numbers borne by such shares respectively.

ARTICLE XL.

The regular semi-annual dividend days shall be the fii'st days
of January and July, annually. Provided, however, that when
either of those days shall fall on a Sunday, the Monday next
succeeding shall be the dividend day.

ARTICLE XL I.

No dividends shall ever be paid to any of the Primary Stock-
holders, except from interest, that shall actually have accrued
on the mortgages, and bona fide profits already realized by the
Company.

ARTICLES OP ASSOCIATION OP

Nor shall any dividends, of jJrqfits, (independently of interest
on the mortgages,) ever be paid to the Primary Stockholders,
except with the consent of the Council.*

ARTICLE XLII.

Whenever the owner of any of the before-named mortgaged
estates shall be a Primary holder of any Productive Stock,
the actual payment of no more interest shall be required of him,
than shall be needed (and be due from him as his proportion) to
meet the obligations of the Company. But the remainder shall
be credited to him, as having been paid by him, and then debited
to him as dividend paid, the same as if it had actually been paid
by him as interest, and then actually repaid to him as dividend.!

And whenever the Trustees shall foresee that the liabilities of
the Company are likely to render it necessary that a mortgagor,
(or owner of mortgaged estate,) and Primary holder of Pro-
ductive Stock, shall make an actual payment of the whole, or
any part, of the interest on his mortgage, at the next semi-annual
period, at which such interest will become due, they shall give
him notice of such necessity, as soon as it shall become evident
to them that such necessity is likely to exist.

ARTICLE XLII I.

Accumulated profits of the Company may be loaned by the
Company.

* See Note to Article XXIX, page 22.

t So long as the bank is prosperous, and the Peodtjctite Stock shall
remain in the hands of the mortgagors, or the owners of the mortgaged estates,
there will, of course, he no need that the interest be paid at all ; because, if
actually paid in as interest, it would have to he immediately paid back to the
same persons as dividend. All that will be necessary, therefore, will be, that the
interest be simply credited as interest, and then debited as dividend, to the same
persons, without any actual payment being made of either interest or dividend.

A MORTGAGE STOCK BANKING COMPANY.

ARTICLE XLIV.

No promissory note, or other evidence of debt, discounted by,
and running to, said Boston Banking Company, shall ever, unless
with the written consent of all makers and indorsers, who shall
he liable thereon, be sold or transferred by said Company, until
after it shall have become due.*

ARTICLE XL V.

1. Any person who shall be a holder (whether Primary, or
Secondary^ or both) of Twenty Shares of the Productive
Stock of said Company, may, for the time being, either be a
Councillor, or appoint one in his stead, at his election. And for
every additional Twenty Shares, so owned by him, he may ap-
point an additional Councillor, f

* The purpose of this Article is to furnish a guaranty to borrowers of Circu-
lating Stock, that they will be able to pay their debts to the bank in the same
currency, which they receive of the bank. If the bank could transfer a note,
which it had discounted, the maker might be compelled to pay it with specie.
The Article will be beneficial to the bank itself, because it gives the public a
guaranty that the bills of the bank will all be wanted to pay debts due the bank.
It thus tends to give to the bills the same value as gold and silver, in the estima-
tion of the public, and thus promote their circulation.

The Article also tends to put it out of the power of the officers of the bank to
embezzle its funds.

The argument, that it might sometimes be advantageous for the bank to
transfer a doubtful note, before it should become due, is of little weight. If a
debt be bad, the loss of it may as well fall upon the bank as upon any body else.
And the knowledge that this must be the case, will make the bank more cautious
as to its loans. Besides, a case would but rarely happen, where the bank would
be benefitted by transferring a note. And then the gain would be less than the
loss arising to the credit of the bills of the bank, in consequence of any uncer-
tainty as to their being wanted to pay debts due the bank.

The right of the bank to transfer a note, after it shall have become due,
is the only right that the bank really needs, or that it would be expedient to
exercise.

t As the powers of the Councillors are mostly advisory, rather than authori-
tative, the name of Councillors is more appropi iate than that of Directors.

ARTICLES OP ASSOCIATION OP

2. All persons, who shall be respectively holders (whether
Primary, or Secondary^ or both) of less than Twenty Shares of
Productive Stock, may unite to choose, by ballot, so many
Councillors as their Productive Stock may entitle them to
choose, choosing one Councillor for every Twenty Shares. In
thus choosing Councillors, each Stockholder shall be entitled to
one vote for each share of his Productive Stock. These
Councillors shall be chosen on each of the semi-annual dividend
days, and shall hold their offices until the dividend day next suc-
ceeding the one on which they shall be chosen. The Stock-
holders, named in this provision, shall be furnished, by the Trus-
tees, with suitable accommodations for their meetings (for the
choice of Councillors), in the banking house of the Company.

3. The Board of Councillors may, by ballot, choose their
President. He shall hold his office only until the dividend day
next after his election. But he may be re-elected. Whenever
there shall be no President, in office, by election, the largest
holder of Productive Stock, who shall be a member of the
Council, shall, for the time being, be the President.

4. The Councillors shall keep a record of their proceedings ;
may choose their own Secretary, and fix his salary ; except that

it shall not exceed dollars per annum, unless with the

consent of the Trustees.

5. The Councillors, by a majority vote of their whole number,
may fix their regular times of meeting, and the number that shall
constitute a quorum for business.

6. The Councillors shall, at all reasonable times, have access
(so far as it shall be necessary for purposes of investigation) to
all the books and papers of the Company ; and shall be entitled
to be informed of all the business affairs of the Company. The
Council, or a Committee thereof, appointed for the purpose, shall
also be consulted beforehand, by the Trustees, on all important
transactions, if circumstances will reasonably admit of it.

7. The Council, or a Committee thereof, appointed for the
purpose, shall have a veto upon any and all loans or discounts
proposed to be made by the Trustees.

A MORTGAGE STOCK BANKING COMPANY.

8. The Councillors shall receive no salaries for their services.

But the President of the Council may, by vote of the Council,
receive a salary not exceeding dollars for six months.

9. The Councillors shall have suitable accommodations for
their meetings furnished to them, by the Trustees, in the banking
house of the Company.

ARTICLE XLVI.

1. The Trustees shall keep books fully showing the pecuniary
standing, and all the pecuniaiy transactions, of the Company.

2. The Trustees shall have two seals ; with one of which they
shall seal all certificates of Productive Stock granted to
Primary Stockholders, and with- the other all certificates of
Productive Stock granted to Secondary Stockholdejs. They
may also, if they deem it expedient, and have the consent of the
Council, have a third seal, and with it seal any or all certificates
of Circulating Stock.

3. The Trustees shall consult the Council, or a Committee
thereof, appointed for the purpose, in all important matters, when
reasonably practicable, and shall conform to their advice so far as
they can consistently with their (the Trustees’) opinion of what
is just to all holders of either Productive or Circidating
Stock, and safe and proper for the best pecuniary interests of the
Company.*

* It would not be proper to make the power of the Councillors authoritative
over the Trustees, because the very nature of the system makes the Trustees the
attorneys of three different classes of Stockholders, to wit ; the Pbimaet and
Secondary holders of PnontrCTivE £tock, and the holders of Circulating Stock.
Legally speaking, the individuals composing one of these classes, are as much
Stockholders as either of the others. The holders of the Circulating Stock have
rights iu the Company, which are as strictly legal as those of the Pkimaet or
Secondary holders of Peoductite Stock. Yet they have no voice in choosing
the Council ; and no voice in the affairs of the Company, except through the
Trustees. If, therefore, the Trustees were controllable by the Council, who repre-

ARTICLES OE ASSOCIATION OP

4. The Trustees shall make no loans or discounts, without the
consent of the Council, or of a Committee thereof, appointed for
that purpose ; and shall make none against their own judgments
of expediency or right, even though the consent of the Council
be given.

5. They shall make no loans, directly or indirectly, to either
or all of themselves ; shall never, as individuals, become either
debtors or creditors (except for their salaries) to the Company ;
and never be holders of either Productive or Circulating
Stock of the Company.*

6. They shall employ a Cashier, and, if need be, other clerks
and servants (except a solicitor or attorney) ; may take suitable
bonds, and shall also be themselves personally responsible for the
fidelity of such cashier, clerks, and servants.!

7. The Trustees may fix Uie salaries of the Cashier and other
clerks and servants, except that the aggregate salaries of the
Cashier and all other clerks and servants (except solicitor or

attorney) shall not exceed dollars per annum, without

the consent of the Council.

8. The Trustees, with the consent of the Council, may employ
a standing solicitor, or attorney, whose salary shall not exceed

sent only the holders of Productive Stock, the rights of the holders of
Circulating Stock might be sacrificed to the holders of Productive Stock. It
is important, therefore, that the Trustees should stand in an independent and im-
partial position towards all classes of Stockholders, and be directly and legally
responsible to each and every Stockholder, of the three several kinds.

The prohibition upon the Trustees’ making any loans, except with the consent
of the Council, who represent the holders (both Primary and Secondary) of
Productive Stock, is a sufficient security, to those Stockholders, that their
interests will not be sacrificed by imprudent loans.

* This provision may, at first view, appear unnecessarily stringent ; but, on
reflection, it wilt probably be seen that its value, as a precaution against embez-
zlement, and against the various sinister influences, that might otherwise operate
upon the Trustees, is such as to outweigh any inconvenience.

t As the Trustees have power to appoint their own Cashier and other ser-
vants, without the consent of the Council, they should be held responsible for
their fidelity.

A MORTGAGE STOCK BANKING COMPANY.

dollars per annum, -without the consent of the

Council.

9. The Trustees shall al-ways have the banking house of the

Company open for business, at least hours, most suitable for

the convenience of customers, on every day, except Sundays,
holidays, and other extraordinary occasions.

10. The Trustees shall take no lease of a banking house for a

longer term than years, nor pay a rent of more than

dollars per annum, -without the consent of the Council.

Nor shall they invest more than dollars in furniture

(independently of the necessary hooks) for their banking house,
-without the consent of the Council.

ARTICLE XLVII.

1. The Trustees, before entering on the duties of their trust,

shall either give a joint bond, in the sum of dollars, or

several bonds, in the sum of dollai-s each, -with at least

three separate and adequate sureties for each Trustee, for their
fidelity as Trustees. Such bond or bonds shall run to the Coun-
cil, and their successors in that office, for and on behalf of all the
Stockholders in said Company — (that is to say, all holders both
of Productive and Circulating Stock) collectively and indi-
vidually.

2. Such bond or bonds shall be in the following form, (names,
dates, and sums being made to correspond with the facts in each
case,) to wit :

ARTICLES OE ASSOCIATION OP

®ru0tee’0 Bonb.

[Entered according to Act of Congress, in the year 1860, by Ltsandee Spooner,
in the Clerk’s office of the District Court of the United States, for the District
of Massachusetts.]

Know all Men, That we, A A , as principal, and

H I , J K , and L M — — , as sureties,

are holden, and firmly bound and obliged, in the full and just

sum of Sixty Thousand Dollars — that is to say, the said A

A in the whole sum of Sixty Thousand Dollars, and the

said sureties in the sum of Twenty Thousand Dollars each —

unto Z A , Y B , X C ,

D , [and others, naming them,] now constituting the Council

of the Boston Banking Company (a Mortgage Stock Banking
Company, having its Banking House in Boston, in the County of
Sufiblk, in the State of Massachusetts, and whose Articles of
Association bear date January 1st, 1860) and to their successors
in said office, for and in behalf of all the Stockholders of said
Company, both collectively and individually; that is to say, for
and in behalf of all holders both of the Productive and Circii-
lating Stock of said Company. To the which payment, well and
truly to be made, we hereby bind ourselves, our heirs, executors,
and administrators, fii’mly by these presents. Sealed with our
Seals. Dated at said Boston, this day of , 1860.

The Condition of this Obligation is such that, whereas

the said A A has been appointed one of the Trustees

of the Capital of said Boston Banking Company, and has con-
sented to accept said trust.

Now, therefore, if he, the said A A shall, at all

times, faithfully, vigilantly, and honestly perform and fulfil all
the duties of said trust, towards all the Stockholdei's of said

A MORTGAaE STOCK BANKING COMPANY.

Company, both collectively and individually — that is to say,
towards all the holders both of the Prodtjcttv^b and the Circu-
lating Stock of said Company; and shall make good to said
Company collectively, and to all Stockholders therein individ-
ually, (whether holders of Productive or Circulating Stock,)
all losses suffered by, or caused to, it or them, by, or by reason

of, any fraud, fault, or neglect of said A A , in his said

office of Trustee ; and shall also pay and satisfy all judgments,

which may be recovered against said A A , both in

private suits by any individual Stockholder or Stockholders, and
in suits by the Council of said Company, for losses or wrongs
suffered by such Stockholder or Stockholders, individually or
collectively, by, or by reason of, any fraud, fault, or neglect of

said A A , as Trustee as aforesaid, then this obligation

shall be void ; otherwise it shall remain in full force.

Signed, sealed, and delivered,
in presence of

3. And if it shall ever reasonably appear to a majority (of a
quorum) of the Council, that any loss or losses have fallen upon
the Company, in its collective capacity^ through any fraud,
fault, or neglect of either or all of the Trustees, it shall be the
duty of the Council to bring appropriate suit or suits (at the
expense of the Company) on the- bond or bonds of such Trustee
or Trustees. And any sum or sums, recovered in such suit or
suits, shall be holden in trust by the Council until, in their judg-
ment, such sum or sums can be safely and properly delivered
over to some one or more of the Trustees of the Company. Or,
if such sum or sums cannot, in the judgment of the Council, and
within a reasonable time, be safely or properly delivered over to
any Trustee or Trustees of the Company, the Council may, in
their discretion, apply such sum or sums to the payment of any

A A . [seal.]

H I . [seal.]

J K . [SEAL.]

L M . [SEAL.]

ARTICLES OP ASSOCIATION OF

undoubted debts or obligations, due by the Company and requir-
ing immediate payment.

4. And if it shall ever be made reasonably to appear to a
majority (of a quorum) of the Council, that any loss or losses
have fallen upon, or that any wrongs have been suffered by, any
individual Stockholder, or any number of Stockholders less than
the whole, of said Company (whether such Stockholder or Stock-
holders be the holder or holders of either Productive or Circu-
lating Stock) by, or by reason of, any fraud, fault, or neglect of
either or all of the Trustees, it shall be the duty of the Council,
on the request of such Stockholder or Stockholders, to bring
appropriate suit or suits (at the expense of the Company) on the
bond or bonds of such Trustee or Trustees, for and on behalf of
such Stockholder or Stockholders. And any sum or sums re-
covered by the Council, in such suit or suits, shall be paid- over,
by them, to the Stockholder or Stockholders entitled thereto.

Px’ovided, however, that the right of any Stockholder or Stock-
holders to have suit brought for, or in behalf of, himself or
themselves, by the Council, and at the expense of the Company,
as aforesaid, shall not preclude such Stockholder or Stockholders
from brino-ino: suit in his or their own name or names, if he or

O O i

they shall so choose, against any or all the Trustees. And any
judgment recovered in such suit, by such Stockholder or Stock-
holders, if not otherwise paid, shall, on demand by said Stock-
holder or Stockholders, be enforced, by the Council, by suit
against such Trustee or Trustees, and his and their sureties, at
the expense of the Company.

5. Whenever a bond or bonds, as hereinbefore provided for,
shall have been given by any Trustee, or Trustees, no renewal
thereof shall be claimed by the Council, oftener than once in five
years, unless in case of the death or bankruptcy of a surety, or
of his removal of his residence from the State of Massachusetts.

6. In case of any disagreement between any Trustee or
Trustees and the Council, as to the suitableness and sufficiency of
any surety offered by such Trustee or Trustees, such Trustee or

A MORTGAGE STOCK BANKING COMPANY.

Trustees shall select one of the holders of Productive Stock
of the Company; and the Council shall select another such
holder ; and the two so selected shall select another person, who
is a holder of neither Productive nor Circulating Stock of the
Company; and the three, so selected, shall investigate the
subject, and report thereon, in writing, to the Council ; and the
joint report of any two of them shall decide the question. But
the Council shall not be required to accept, as a surety, any
person not a resident of the State of Massachusetts.

ARTICLE XL VIII.

If any Trustee shall be finally convicted, in any court of
justice, of any embezzlement or other crime, committed in his
office as a Trustee, all his rights and powers, as a Trustee, shall
from that moment, cease and determine, and his place as Trustee
be vacant, and liable to be filled by another.

ARTICLE XLIX.

If any Trustee shall be finally convicted, in any court of
justice, of any infamous crime, committed hy him otherwise
than in his capacity as Trustee^ he shall be liable to be re-
moved from his office of Trustee, by votes representing a majority
of the Productive Stock of the Company, whether held by
Primary or Secondary Stockholders. Said votes shall be given
in the following manner, to wit : The necessary number of
Stockholders shall subscribe, upon a book kept by the Trustees,
a declaration, fully setting forth the cause of the removal, and
their wish and determination that he be removed. And such
declaration, so subscribed, shall, from that moment, operate to
7

ARTICLES OF ASSOCIATION OP

extinguish all his rights and powers as a Trustee, and to make
his place vacant, and liable to be filled by another.

And each subscriber to this declaration shall affix, to his
signature, the true date thereof, and the number of shares of
Productive Stock, of which he shall be, at the time, the
holder and owner ; and shall also designate himself as being
either a Primary or Secondary holder, as the case may be.

ARTICLE L.

If any Trustee shall, at any time, have become so permanently
sick, insane, or unable to perform the duties of his office of
Trustee, or shall be so negligent of those duties, as to make it
necessary or proper that his place should he declared vacant, and be
filled by another, and the fact shall have been ascertained to the
satisfaction of not less than four fifths, in number, of all the
holders of Productive Stock, they being, at the same time,
holders and true owners of not less than four fifths, in quantity,
of all the Productive Stock of the Company (whether such
holders be Primary, or Secondary^ or both) and a permanent
record thereof, and of the wish and determination of such holders
that he be removed, shall have been made on the books of the
bank, and personally subscribed by such holders, such record
shall, from the moment of its being so subscribed, operate to
cancel all his rights and powers as Trustee, and vacate his place
as Trustee, and make it liable to be filled by another.

And each subscriber to such record shall affix, to his signature,
the true date thereof, and the number of shares of Productive
Stock, of which he shall be, at the time, the holder and owner ;
and shall also designate himself as being either a Primary or
Secondary holder, as the case may be.

A MOKTGAGE STOCK BANKING COMPANY.

ARTICLE LI.

Whenever a vacancy shall occur in the office of Trustee, it
shall be filled by the votes of not less than four fifths, in number,
of all the holders of Productive Stock, they being, at the same
time, holders of not less than four fifths, in quantity, of all the
Productive Stock of the Company. And the election shall be
made by the necessary number of Stockholders subscribing, upon
a book of the bank, a declaration substantially in the following
form, to wit :

“We, the subscribers, being the holders and true owners of
the number of shares of Productive Stock of the Boston
Banking Company set against our names respectively, hereby

declare that T T , of , in the County of ,

in the State of , is our choice for the office of Trustee of

said Company, in the place of W W , removed

[resigned, or deceased, as the case may be].”

And each subscriber to this declaration shall affix, to his signa-
ture, the true date thereof, and the number of shares of Produc-
tive Stock, of which he shall be at the time the holder and
owner ; and shall also designate himself as being either a Pri-
mary or Secondary holder, as the case may be.

And when the person, so appointed, shall have given the
requisite bonds to the Council, for his fidelity as a Trustee, the
other Trustees [or Trustee, if there shall be but one] shall convey
to him his appropriate property and rights in and over the Capital
Stock and other property of said Company, by a deed in the
following form, (names, dates, and numbers being made to corres-
pond with the facts in each case,) to wit :

ARTICLES OF ASSOCIATION OP

® rus t H5 ee5 .

[Entered according to Act of Congress, in the year 1860, by Ltsander Spooner,
in the Clerk’s ofKce of the District Court of the United States, for the District
of Massachusetts.]

Whereas R R , of , in the County

of , in the State of , has been duly appointed

one of the Trustees of the Capital of the Boston Banking
Company : a Mortgage Stock Banking Company, ivhose Articles
of Association are dated January 1st, 1860, and whose Banking
House is in said Boston.

And Whereas, We, A A , and B

B , both of said Boston, are now the only Trustees of said

Boston Banking Company.

And Whereas, By reason of the appointment aforesaid, it

has become our legal duty to convey to said R R

an equal right and property, with ourselves respectively, in the
Capital Stock, and all other property, of said Boston Banking
Company.

Now, Therefore, Be it known, that we, the said A

A , and B B , Trustees as aforesaid, in con-

sideration of the premises, and of one dollar, to us paid by the
said R R , the receipt of which is hereby acknowl-
edged, and for the purpose of investing him, the said R

R with equal powers and rights with ourselves respectively

in the control of the Capital Stock and all other property of said
Boston Banking Company, do hereby give, grant, sell, assign,
and convey, and have hereby given, granted, sold, assigned, and

conveyed, unto the said R R , in his capacity of

Trustee as aforesaid, and to his successors in said olEce, one third
of all our respective rights and property in and to the Capital

A MORTGAGE STOCK BANKING COMPANY.

Stock, and all other property, of said Boston Banking Company,
without any reservation or qualification whatever.

To Have and to Hold the same to the said B K ,

in his capacity of Trustee as aforesaid, and not otherwise, and to
his successors in said office forever, jointly with ourselves and our
successors, in trust for the holders of the Productive and Cir-
culating Stock of said Company ; and to be holden and adminis-
tered in accordance with the said Articles of Association of said
Company, and not otherwise.

In Witness Whereof, We, the said A A ,

and B B , have hereunto set our hands and seals

this day of , in the year eighteen hundred

and .

Signed, sealed, and delivered, '] ^ [SEAL.]

in presence of | 3 3 _

D G . j

F H . J

Boston, October 1st, 18 — . Recorded in the Journal [or
Records] of the Council of the Boston Banking Company for
this date [or in some particular book kept by the Council, de-
scribing it, with the page].

I D H , Pi'csH. of Council.

[or S B , Sec'y of Council.^

Boston, October 2d, 18 — . Recorded in the Books of the
Trustees of said Boston Banking Company, to wit, in [here
describe the book, whatever it may be] page — .

A A , Trustee.

[or E E , Cashier. \

And said Deed, before being delivered to the newly appointed
Trustee, shall be recorded in appropriate books, both of the
Council, and of the Trustees, and proper certificates of such
records, substantially in the forms aforesaid, shall be made upon

AKTICLBS OF ASSOCIATION OF

the Deed itself. And the Deed shall then be delivered to the
newly appointed Trustee; and such delivery shall operate to
invest him with equal rights, as Trustee, with any and all his
associate Trustees. And he shall then immediately cause said
Deed to he recorded in the Registry of Deeds for the County of
Suffolk.

ARTICLE LII.

1. The regular salaries of the Trustees shall he at the rate of

dollars each per annum, payable semi-annually, on the

regular dividend days.

2. The regular salaries of the Trustees may be increased, for
definite periods, not exceeding five years each, by the votes of not
less than four fifths, in number, of all the holders of Productive
Stock, they being, at the time, holders of not less than four
fifths, in quantity, of all the Productive Stock of the Com-
pany. The votes, for this purpose, shall be given by the neces-
sary number of Stockholders subscribing, upon some book of the
bank, kept by the Trustees, a declaration substantially in the
following form, to wit :

“We, the subscribers, being the holders and true owners of
the number of shares of the Productive Stock of the Boston
Banking Company, set against our names respectively, hereby
give our vote that the regular salaries of each of the three
Trustees of said Company be increased, by the sum of one
hundred dollars each per annum, for the term of three years,
from and after the first day of July, 1861.”

And each subscriber to this declaration shall affix, to his signa-
ture, the true date thereof, and the number of shares of Produc-
tive Stock, of which he shall be, at the time, the holder and
owner ; and shall also designate himself as being either a Pri-
mary or Secondary holder, as the case may be.

This vote shall be given only at some time within the six
months next preceding the day, when the increased salary is to

commence.

A MORTGAGE STOCK BANKING COMPANY.

3. In addition to their regular salaries, each Trustee shall
have_^re per centum of all the clear profits of the business done
by the Company, (independently of the interest on the mortgages,)
the same to- be payable only at the same times with the dividends,
of profits^ to the Primary Stockholders.

4. Neither the salaries of the Trustees, nor their portion of
the profits, shall ever he paid to them, except in the order,
relatively to other claims, in which they stand in Article XXIX.
And if it shall ever happen that the entire Productive Stock
of the Company shall be transferred, from any one body of Pri-
mary Stockholders, in redemption of the Circulating Stock,
any arrearages, either of salaries or profits, due, at the time, to
any of the Trustees, shall be forfeited by them.*

5. In case of the death or resignation of a Trustee, or of his
removal for any other cause than crime committed in his office of
Trustee, his proportion of any accumulated profits shall be paid
to him, his heirs, executors, administrators, or assigns, within
three months after such death, resignation, or removal. In case
of his office ceasing by reason of crime committed by him in his
office of Trustee, his proportion of any accumulated profits shall
be paid to him, his heirs, executors, administrators, or assigns,
within six months thereafter, unless it shall be found necessary or
proper to retain them as an indemnity for his crime.

AKTICLE LIII.

The Trustees may, with the consent of the Council, (or an
authorized Committee thereof,) take Productive Stock, or any
other real or personal property, and especially the bills, certifi-

* This provision is proper, because it is proper that the Trustees should have
some personal motive to vigilance in the management of the bank. It is also
necessary, because otherwise the Productive Stock would pass into the hands
of the new body of Primary holders, subject to an incumbrance, and there.-
fore not at its full nominal value.

ARTICLES OF ASSOCIATION OF

cates, or scrip of other banks, in satisfaction of debts due to the
Company. And when such stock or other property shall have
been taken, it shall, with the consent of the Council (or an
authorized Committee thereof) be disposed of, by auction or
otherwise, soon as it can be advantageously for the interests of
the Company.

ARTICLE LIV.

If any holder, either Primary or Secondary, of Productive
Stock, shall become indebted to the Company, either as princi-
pal, or surety, such indebtedness shall operate as a lien upon
his Productive Stock, unless a written contract to the contrary
be entered into.

ARTICLE L V.

The Company may receive the Circulating Stock of the
Company, on deposit, wuthout interest, and be responsible for its
safe keeping ; but such Stock shall not be loaned, nor re-issued,
by the Company, until it shall have been redeemed.

ARTICLE LVI.

The Trustees, with the consent of the Council, or an author-
ized Committee thereof, may allow money and currency, other
than the Circulating Stock of the Company, to he deposited
in the vaults or safes of the Company, without compensation ;
but they shall not make the Company in any way responsible for
its safe keeping ; and shall not loan nor re-issue the same, for, or
on behalf of, the Company, nor on securities running to the
Company.*

* The reason for this Article is this. If this system of banking should be
generally adopted, the number of banks would be so great, that they would be
able to supply all demands for a currency, without issuing their deposits. All

A MORTGAGE STOCK BANKING COMPANY.

AETICLE LVII.

Whenever the consent of the Council, or any Committee
thereof, shall be necessary to any genei’al, or any particular,
action of the Trustees, such consent, if the Trustees require it,
shall be expressed by a resolution or memorandum, entered upon
the records of the Council, and a certified copy thereof furnished
to the Trustees ; said certified copy to be -written in a book kept
by the Trustees, if they shall desire it.

ARTICLE LVIII.

All holders of Productive Stock — and also all holders of
Circulating Stock, which shall have been presented for redemp-
tion, and not been redeemed — shall be entitled, at all reasonable
times, to all necessary and proper information, from the Trustees,
as to the afiairs of the Company, and to access 4o the books of
the Company, so far as such access shall be necessary for the
purpose of investigating the pecuniary condition of the Company.
And all holders, whether Primary or Secondary, of Produc-
tive Stock, shall be entitled to a printed copy of the Company’s
Articles of Association.

ARTICLE LIX.

The Trustees, with the consent of the Council, or an author-
ized Committee thereof, may make such contracts with banks and

necessity, therefore, for loaning deposits, will be snperseded. By loaning their
deposits, the banks would incur a liability to their depositors, which is foreign to
the nature of the system, and which, for obvious reasons, ought to be avoided.
The power to loan deposits would be practically useless to the banks ; because
the banks, by reason of their number, would be unable to keep out all their own
Circulating Stock, to say nothing of their deposits.

ARTICLES OP ASSOCIATION OP

individuals, for the redemption of the currency of the Company,
in such towns and cities, other than Boston, as may be thought
expedient, with a view to promote the circulation of the currency.

ARTICLE LX.

Neither the Trustees, as such, nor the Company, by any of its
servants or agents, shall ever contract any indebtedness, except
for rents, salaries, and such other necessary and proper expenses,
as are necessarily implied in taking care of the Company's
capital, and carrying on its business as a Banking Company, in
the manner hereinbefore specified.

ARTICLE LXI.

At such time, on or after the first day of January in the year
Eighteen Hundred and Eighty, as the Council may appoint,
the Trustees shall cease to grant loans, and to issue the Circulating
Stock of the Company ; and shall, as soon thereafter as reason-
ably may he, collect all debts due the Company ; compel payment
of the mortgages (having given the holders of the mortgaged
estates one year’s notice of the demand, and allowing them to
offset Productive Stock in payment of their mortgages, so far
as that can be done consistently with justice towards all con-
cerned) ; redeem all the Circulating Stock of the Company ;
and do whatever may be necessary to close up the affairs of the
Company, and dissolve the Company itself. But the mortgages
shall not be discharged, nor the Company dissolved, until all the
liabilities of the Company shall be cancelled ; all its Circulating
Stock redeemed; all holders of Productive Stock paid for
their Stock ; and all certificates of both Productive and Circu-
lating Stock cancelled or destroyed.

Provided, however, that if, after the Trustees shall have given
due notice to the public to return the Circulating Stock of the

A MORTGAGE STOCK BANKING COMPANY.

Company for redemption, and after ample time shall have elapsed
for the purpose of returning such Stock for redemption, any

small amounts thereof, not exceeding dollars, in the

aggregate, shall still be outstanding, and it shall be believed, by
the Trustees, that such Circulating Stock shall have been either
lost, or destroyed, or that it is not likely soon to be returned for
redemption, they shall proceed to dissolve the Company, dis-
tribute its capital to the individual owners, reserving in their own
hands, out of the funds of the Company, enough gold or silver
coin to redeem all the still outstanding Circulating Stock.
And if such Circulating Stock, or any portion thereof, shall be
returned to said Trustees for redemption, at any time within
three years thereafter, it shall be redeemed by them. But if any
portion of said outstanding Circulating Stock shall not be
returned for redemption within the said three years, it shall be
presumed to have been lost or destroyed, and the fund reserved
for its redemption shall be paid over to its rightful owners.

In Witness op all which. We, the said F F ,

G G , H H , and I I , mortgagors

aforesaid, and Primary holders of all the Productive Stock

of said Company, and also we, the said A A , B

B , and C C , Trustees hereinbefore named, in

token of our acceptance of said trust, have set our hands and
seals to nine copies of these Articles of Association (consisting of
fifty-nine printed pages) and have also set our names at the
bottom of each and all the said fifty-nine pages, this first day of
January, in the year Eighteen Hundred and Sixty.

Nine Copies Signed and Sealed,
and One Copy Delivered to
Each of the Parties Signing
the same, in presence of us.

A D .

B E .

C F .

D G .

F F . [seal.]

G G . [seal.]

H H . [seal.]

I I . [seal.]

A A . [seal.]

B B . [seal.]

C C . [seal.]

I 1st D E X

T O

ARTICLES OF ASSOCIATION.

Art. 1.
Art. 2.
Art. 3.
Art. 4.
Art. 5.

Art. 6.
Art. 7.
Art. 8.
Art. 9.
Art. 10.
Art. 11.

Art. 12.

Art. 13.
Art. 14.

Art. 15.
Art. 16.

Name of Company.

Place of Business.

Names of Trustees.

Capital Stock. Copies of Mortgages.

Shares $100 each. — Original owners of the Stock. —
How the Stock is apportioned among them.
Productive Stock — entitled to Dividends.

AYhat the Dividends shall consist of.

Circulating Stock — amount, &c.

Circulating Stock — what it is.

Form of Certificates of Circulating Stock.
Certificates of Circulating Stock not to exceed
100,000 Shares.

Circulating Stock — how issued for Circulation as
Currency.

Circulating Stock — how redeemed.

Original holders of Productive Stock shall be termed
Primary Stockholders.

Secondary Stockholders — who shall be so called.
Dividends to Secondary Stockholders.

INDEX TO ARTICLES OF ASSOCIATION.

Art. 17.
Art. 18.

Art. 19.

Art. 20.

Art. 21.

Art. 22.

Art. 23.
Arts. 24,

Art. 27.
Art. 28.

Art. 29.

Dividends to Primary Stockholders.

Productive Stock — how selected — to be transferred
in redemption of Circulating Stock.

Pi'oductive Stock, transferred in redemption of Circu-
lating Stock, may be re-purchased by the Company.

On what terms Productive Stock, transferred and
re-purchased, shall be restored to its Primary
holders.

When the entire Productive Stock shall have been
transferred, in redemption of Circulating Stock,
the right to re-purchase shall become extinct,
and the Secondary Stockholders become Primary
holders.

Secondary Stockholders, on becoming Primary hold-
ers, shall receive no dividends until new certifi-
cates shall be issued to them.

On what conditions the Trustees may accept loans
from Primary Stockholders.

25, and 26. Company may, on certain conditions,
elect to pay interest on Circulating Stock, pre-
sented for redemption, rather than redeem it on
demand.

How Circulating Stock, in less amounts than $100,
may be redeemed.

Productive Stock may be re-purchased, and Circu-
lating Stock redeemed, on regular dividend days,
without notice, at other times with notice, to
holders.

In what order the resources of the Company shall be
applied to the payment of expenses, the redemp-
tion of Circulating Stock, the payment of divi-
dends, salaries, &c.

INDEX TO ARTICLES OF ASSOCIATION.

Art. 30.
Art. 31.
Art. 32.

Art. 33.

Art. 34.

Art. 35.

Art. 36.

Art. 37.
Art. 38.
Art. 39.

Art. 40.
Art. 41.

Form of “ Transfer of Productive Stock, in Redemp-
tion of Circulating Stock.”

Form of “ Re-conveyance of Productive Stock from a
Secondary to a Primary Stockholder.”

Productive Stock, transferred in redemption of Cir-
culating Stock, to be credited, and when re-pur-
chased, to be debited, to the Primary holder.

Primary Stockholders entitled to Certificates of Pro-
ductive Stock. — Form of Certificates. — Also,
form of “ Primary Stockholder's Sale of Produc-
tive Stock.”

Secondary Stockholders entitled to Certificates of
Productive Stock. — Form of Certificates. — Also,
form of “ Secondary Stockholder’s Sale of Pro-
ductive Stock.”

Form of “ Sale, by a Primary Stockholder, of his
Right to Productive Stock, in the hands of a
Secondary Stockholder.”

Trustees authorized to pay taxes on the mortgaged
estates, keep buildings and fixtures insured. —
How insurance money, recovered, may be applied.

Power of Trustees over the mortgaged estates, when
interest, &c., is not paid.

Terms, on which mortgaged estates may be released
from the mortgages.

Records to be preserved of the particular numbers of
any Shares of either Productive or Circulating
Stock, that may be cancelled.

What days shall be dividend days.

No dividends to be paid, except from interest actually
accrued, and do?ia fide profits already realized. —
Consent of Council required to the payment of
dividends of profits to Primary Stockholders.

INDEX TO AETICLES OP ASSOCIATION.

Art. 42.

Art. 43.
Art. 44.

Art. 45.
Art. 46.
Art. 47.

Arts. 48,

Art. 51.

Art. 52.
Art. 53.

Art. 54.

Arts. 55
Art. 57.

Art. 58.

Art. 59.

Art. 60.
Art. 61.

Actual payment of no more interest to be required
of Primary Stockholders than necessary.

Accumulated profits may he loaned.

Notes, &c., not to be transferred, until after they
become due, unless with consent of makers and
indorsers.

Councillors — how chosen — their powers, &c.

Trustees — • their powers, duties, &c.

Trustees to give Bonds. — Form of their Bonds. —
How sued on their Bonds.

49, and 50. How Trustees may forfeit, or be re-
moved from, their offices.

How vacancies in the office of Trustee may be filled. —
Form of “Trust Deed.”

Salaries of Trustees.

What property may be taken in payment of debts due
the Company.

Indebtedness of holders of Productive Stock shall
operate as a lien on their Stock.

and 56. Deposits.

Consent of Council to acts of Trustees, to be ex-
pressed by resolution, or memorandum, &c.

Stockholders to be entitled to information, and to
access to books of the Company.

Contracts may be made for redemption of the cur-
rency at other places than Boston.

Company to contract no debts, except, &c.

When and how the Company may be dissolved.

7«-

41.

)

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Date Due

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FORM 335 45M I0>41

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